According to a survey of household finances, British household savings sank this October as the salary growth slowed to its weakest rate in eight months.
The IHS Markit Household Finance Index fell to 45.1 this month from the 45.7 which was recorded during the previous month. It signalled an increased pessimism by households in the United Kingdom towards their financial situations.
The negativity was prompted by weak employment income growth, however, the index revealed that households increased spending this month using both unsecured credit and savings.
The optimism regarding house prices was also at its lowest level ever since immediately after the EU referendum.
Joe Hayes, an IHS Markit economist, stated: “UK households casted their most downbeat assessment of current finances in three months in October as weaker earnings growth from employment limited cash availability.”
He added: “Looking ahead, households were more concerned about their future budgets. Sentiment may have been impacted by the property price outlook dropping to the least optimistic level since the Brexit vote.”
He continued: “Nonetheless, the negativity towards current finances was relatively modest. The dip in official UK inflation statistics caught markets off-guard last week, but households surveyed in October by the HFI pared back their inflation expectations to the lowest in two years. Households were also less concerned about job security, encouraging them to use savings and unsecured credit to offset weaker employment earnings.”