Families’ gloom on finances deepens

Some 43 per cent of households predict that their situation will deteriorate next year, while just 24 per cent think they will see an improvement, Markit’s latest household finance index said.

People aged 55-64, working in the public sector, or living in Wales are the most likely to be downbeat about their prospects.

But despite the gloomy outlook, the pressure on families has eased off slightly compared with this time a year ago, the report said.

Overall, Markit’s index stood at 36.8 in December, falling back from a 23-month high of 39.3 recorded in November and pointing to a sharp squeeze on household budgets over the last month.

Readings above 50.0 signal that people’s finances are improving and those below it a deterioration. While the latest figure is still a negative one, it shows a small improvement compared with December 2011’s reading of 34.3.

Analysts expect families to come under renewed pressure next year amid a string of price hikes announced by energy companies, with increased food costs and rents also squeezing their budgets.

Markit said around 32 per cent of households noted that their finances had got worse in December, compared with just six per cent who saw an improvement.

People in the oldest age category surveyed of 55-64 were by far the most pessimistic about their finances next year.

There are four times as many people in this age group who believe their situation will deteriorate as those who expect to see it get better.

This age group was also the most likely to believe their living costs are set to go up strongly.

When looking at the findings by job sector, public sector staff are more pessimistic than those in the private sector. Public sector workers also reported a recent marked drop in their incomes from employment.