Family budgets tighten in April

The squeeze on families' finances tightened its grip in April for the first time in 2013, a report found.

Four times as many households (32%) reported that their budgets worsened compared with those who saw an improvement (8%), according to the latest household finance index compiled by financial information firm Markit.

The overall reading for April was 37.7, down from 39.3 in March and marking the first time this year that the downturn in financial wellbeing has deepened month-on-month. Readings above 50 indicate that people's finances are improving and those below this point show a deterioration.

Markit said that the worsening finances largely reflect an ongoing squeeze on cash availability for people on lower incomes, combined with higher living costs in April.

All income groups reported a sharper deterioration of their finances in March, and people earning between £15,000-£23,000 were particularly badly hit, as were those renting from local authorities and housing associations.

Across the survey, just under 42% of households expect their finances to worsen over the next 12 months, compared with 27% that forecast an improvement.

People living in the North East and the North West were the most pessimistic about their future prospects, while those living in the East of England were the most optimistic.

Public sector workers reported a slight drop in their employment incomes this month, while private sector workers saw a moderate increase. Manufacturing bucked the overall trend, with pay growth at its strongest in eight months. Workplace activity has also been on the increase for three months in a row, with the strongest lifts being seen in the IT/telecoms and energy and transport sectors.

A widening gap has emerged between public and private sector workers in terms of job security. Public sector staff noted the most marked levels of job insecurity since January 2012, while private sectors were the least downbeat since the survey began more than four years ago.

Tim Moore, a senior economist at Markit and author of the report, said that weak household income growth compared with high living costs will continue to drag on consumers' ability to spend in the coming months. He said: "April's survey highlights a deepening downturn in financial wellbeing, driven by renewed pressures on household income and another strong rise in living costs."