|There was more bad news for George Osborne ahead of Thursday’s release of closely-watched GDP figures, as new research shows that the squeeze on household finances has started to intensify.
British family finances worsened in April according to the latest research from data group Markit. The group’s household finance index fell to 37.7 in April, down from 39.3 in March.
“This was the first month-on-month fall in the index since December 2012, signalling that the squeeze on household finances intensified for the first time in 2013,” Markit said.
The news comes ahead Thursday’s key GDP release, which will reveal whether the UK has slipped into a “triple-dip” recession. City economists expect that Mr Osborne will escape the dubious honour of being the first Chancellor to preside over a Britain’s first-ever triple-dip, with a consensus view predicting a 0.1pc rise in output. However, some economists believe the economy is back in recession. Morgan Stanley, for example, expects GDP to have contracted by another 0.3pc,
Lack of confidence is also reigning in spending and hampering the recovery. Half of Britons feel they have become financially worse off over the last year, new research from Halifax shows. The squeeze is being felt the hardest by people in middle age, with 55pc of people in their 40s and 60pc of people in their 50s saying their finances were being squeezed. This compared with 49pc across all age groups.
However, there are some glimmers of brightness to give Mr Osborne some relief. Deloitte’s latest consumer tracker report has revealed signs of life in the consumer economy.
Sentiment about disposable income rose by nine points in the first quarter of 2013, from minus 40pc to minus 31pc. This is the most optimistic consumers have felt about the level of cash they have available since Deloite started tracking the measure in 2011.
Manufacturing pay is also remaining flat through the bargaining period for manufacturing companies in the face of a subdued economy, according to the latest survey on pay data from EEF, the manufacturers’ organisation, and JAM Recruitment.
“Despite inflation remaining above target, this is not being reflected in pay pressures for manufacturing companies,” Lee Hopley, EEF chief economist, said. So long as the economic outlook remains tough, there is little to suggest that there will be any change to this position.”