Lower income earners are facing the worst squeeze on their finances in at least four years, a study has suggested
Lower income earners are facing the worst squeeze on their finances in at least four years, a study has suggested.
There is a growing gap between the pressure felt those on lower incomes and higher earners, who saw their financial situation easing, Markit's household finance index for February found. Those with incomes of £15,000-£23,000 saw the strongest squeeze on their finances in the survey's four-year history, while those earning below £15,000 recorded the sharpest deterioration in their budgets for 14 months.
By contrast, households in higher income brackets saw the deterioration in their finances slow down, while the highest earners, on £57,751 and over, saw the joint slowest squeeze on their budgets in a year. Four out of 10 households across the survey expect their finances to worsen over 2013, while around one quarter predict an improvement.
The lowest earners were the most downbeat, with 57% anticipating a deterioration, while those on the highest incomes had a neutral outlook, with similar numbers in this bracket predicting either a fall or an improvement.
Rising rents and food costs have placed added pressure on families, while a string of energy companies recently announced price hikes. Meanwhile, wages have remained stagnant.
People working in retail, construction, education, health and social services tended to be the most downbeat about their finances, while those working in IT and finance were the least pessimistic. Retail workers were the most pessimistic about job security.
The study also showed the sharpest deterioration in families' cash availability since June last year, with 35% of people reporting a decline. More than twice as many households also reported a drop in their savings than those who saw a rise.
Overall, the index was unchanged at 37.7 in February, which is well below the 50 mark which shows that families' finances are improving rather than getting worse. One third of households reported that their situation worsened during the month, while just one in 14 saw it get better.
Tim Moore, senior economist at Markit and author of the report, said: "There was no let-up in the squeeze on UK household finances during February, as higher living costs and muted wage trends combined to reduce cash availability at the fastest pace since mid-2012...
"Worsening consumer finances are likely to further rein in spending on the high street and to complete this circle latest survey data showed that retail sector workers were the most downbeat about their job security and workplace activity in February. The lowest income households saw their financial situation move in an entirely different direction to the highest earners in February."The monthly survey asked 1,500 people across Britain about their finances.end