The number of households expecting the Bank of England (BoE) to cut interest rates has risen to its highest level since the Brexit referendum, survey data showed today, as Britons remain downbeat about their financial health over the coming months.
Households are pessimistic despite wages rising at a fast pace and unemployment close to record lows. Brexit uncertainty has been one factor dampening the mood, and there are signs that Britain’s jobs boom is slowing down.
The UK household finance index – a gauge of people’s perceptions of financial wellbeing by data firm IHS Markit – edged up to 44.4 in October from 43.1 in September.
The figure was the gauge’s highest mark since January but nonetheless signalled pessimism among households about their finances. A score of under 50 is considered a negative reading.
IHS Markit economist Joe Hayes said the “latest survey results from UK households continue to show how economic and political uncertainty is holding back what could have been a more resilient growth period for the UK economy”.
“These concerns, coupled with the uncertain economic outlook, have led to an increased proportion of UK households expecting the Bank of England to cut interest rates.”
At the start of the year over 70 per cent of UK households through the BoE would hike rates when it went to change them. That number has now fallen to around 58 per cent, its lowest level in two years.
A growing number of households – 25 per cent – now expect the Bank’s next move to be a cut, the highest proportion since October 2016.
Hayes said: “Negative job security perceptions and a pessimistic financial health outlook have led UK households to delay spending, with major purchases suffering as a result.”
By Harry Robertson
Source: City AM