The spending by Britons on the occasion of Christmas would fall for the first time in real terms in about five years since 2012, estimated credit card firm Visa and a survey by data firm IHS Markit showed on Monday that this month, more of a squeeze on their finances was being felt by British households.
The British economy has been witnessing some stiff rise in the rates of inflation – resulting in goods becoming costlier, and a slow growth in the wages at the same time – thereby reducing the purchasing power. The latest two reports therefore underscore the need for the U.K. finance minister Philip Hammond to announce some form of measures while presenting the budget for the year so that the voters are able to cope up with the situation.
The IHS Markit Household Finance Index had gone up somewhat in October to reach 43.8 but the figure was revised again by the agency in November when the index fell to 43.4. With regards to the outlook of their finances, there were the most pessimistic responses received from the participators of the survey.
“November’s survey signalled a further worsening of the UK household budget squeeze,” Sam Teague, an IHS Markit economist, said in a statement.
There are assumptions that Britain’s public finances are in a fragile state and despite this there is pressure on Hammond by some members of his Conservative Party to make use of this budget for helping the British households.
Possibly due to the fact that the banks in the country had reduced the credit to households and potentially also due to the reduction in spending power, there was a slowness in the pace of spending growth by households, the IHS Markit survey found.
With respect to lending to customers, advice of not taking any big risks by banks have been given by the Bank of England.
IHS Markit said that since June 2015, the fastest fall in unsecured credit availability was perceived by households.
1,500 Britons between Nov. 8 and Nov. 12 were surveyed for the study.
In sharp contrast to the spending by Britons last Christmas, there would be a 0.1 percent fall in the amount of spending by Britons after making adjustment for inflation during the Christmas holidays which would also be the first annual fall since 2012, predicted Visa in a separate study.
2017 has been the weakest performance so far in Briton’s spending and Visa said it anticipated no change in spending in the rest of the year.
448 pounds a year which is equal to almost one week’s wages for worker after getting that adjusted for rising prices, is the loss that was being faced on the average by workers in the country due to the inflation arising out of last year’s Brexit vote, said a separate report prepared by university academics and was released on Monday.
“Ahead of Wednesday’s budget statement from the chancellor, our findings show that the Leave vote has led to a sharp increase in inflation,” Holger Breinlich, an economics professor of the University of Nottingham, a co-author of the report, said. “At a time of growing disenchantment with austerity, this is clearly unwelcome news for living standards across the UK.”
(Adapted from Reuters & Digitallook.com)