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UK households feel even worse off than last month, survey suggests UK households feel even worse off than last month, survey suggests
(5 months later)
Ahead of official figures on Thursday that will show whether the UK has slipped into a triple-dip recession comes a downbeat report into consumers' finances.Ahead of official figures on Thursday that will show whether the UK has slipped into a triple-dip recession comes a downbeat report into consumers' finances.
British households felt worse off in April as they continued to struggle with rising prices and meagre pay growth, suggests a survey out on Monday from the financial information services company Markit.British households felt worse off in April as they continued to struggle with rising prices and meagre pay growth, suggests a survey out on Monday from the financial information services company Markit.
Bringing a halt to what had been an improving trend so far this year, the Markit household finance index slid lower this month, signalling that household finances were deteriorating faster than in March.Bringing a halt to what had been an improving trend so far this year, the Markit household finance index slid lower this month, signalling that household finances were deteriorating faster than in March.
The firm said the result largely reflected the combined effect of lower income and higher living costs for households.The firm said the result largely reflected the combined effect of lower income and higher living costs for households.
"Triple dip or no triple dip, there has been little alleviation of the strain on households' financial wellbeing so far this year. Moreover, with incomes failing to keep pace with living costs, household finance constraints are likely to act as a further drag on consumer spending over the months ahead," said Markit's senior economist Tim Moore."Triple dip or no triple dip, there has been little alleviation of the strain on households' financial wellbeing so far this year. Moreover, with incomes failing to keep pace with living costs, household finance constraints are likely to act as a further drag on consumer spending over the months ahead," said Markit's senior economist Tim Moore.
In its first monthly fall this year, the household finance index dropped to 37.7, down from 39.3 in March and well below the 50-mark that separates improvement from deterioration. Four times as many households, or 32%, reported a worsening in their finances in April than those who saw an improvement.In its first monthly fall this year, the household finance index dropped to 37.7, down from 39.3 in March and well below the 50-mark that separates improvement from deterioration. Four times as many households, or 32%, reported a worsening in their finances in April than those who saw an improvement.
Households were slightly less downbeat, however, about the outlook for the next 12 months. Economists are divided over whether official data on Thursday will show the UK economy shrank in the first quarter, marking a triple-dip recession. Capital Economics says the chances of a further drop in GDP are "pretty much 50/50".Households were slightly less downbeat, however, about the outlook for the next 12 months. Economists are divided over whether official data on Thursday will show the UK economy shrank in the first quarter, marking a triple-dip recession. Capital Economics says the chances of a further drop in GDP are "pretty much 50/50".
"Of course, whether the economy shrinks by a fraction or grows by a fraction is of little importance in the big picture. Barring a major surprise in this week's GDP figures, the main point is that the recovery will still look depressingly dismal – especially now that the labour market is weakening," said Vicky Redwood at Capital Economics."Of course, whether the economy shrinks by a fraction or grows by a fraction is of little importance in the big picture. Barring a major surprise in this week's GDP figures, the main point is that the recovery will still look depressingly dismal – especially now that the labour market is weakening," said Vicky Redwood at Capital Economics.
Howard Archer, economist at IHS Global Insight, is forecasting marginal GDP growth of 0.1 to 0.2% but says the first quarter is hard to call.Howard Archer, economist at IHS Global Insight, is forecasting marginal GDP growth of 0.1 to 0.2% but says the first quarter is hard to call.
"There is major uncertainty over the outlook given that March's cold weather could have had a further dampening impact on economic activity after the snow in January took a toll," he said."It would be good for psychological/confidence reasons if the economy could dodge contraction in the first quarter and therefore avoid nasty and potentially damaging headlines about triple-dip recession.""There is major uncertainty over the outlook given that March's cold weather could have had a further dampening impact on economic activity after the snow in January took a toll," he said."It would be good for psychological/confidence reasons if the economy could dodge contraction in the first quarter and therefore avoid nasty and potentially damaging headlines about triple-dip recession."
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