LONDON (Reuters) – British households’ confidence about their finances remained low in September, and showed no sign of returning to pre-pandemic levels, according to a survey which raises questions about the durability of the current bounce back in retail spending.
The IHS Markit Household Finance Index held at 40.8 in September, unchanged from August and some way below the level of around 44 where it fluctuated through 2019.
Job worries intensified for the first time since the depth of the pandemic, as a government support scheme for several million workers ends next month with no replacement in sight.
“September data also signalled reductions in household spending, savings and cash availability, all of which highlight the crunch on finances at present,” IHS Markit economist Lewis Cooper said.
The downbeat tone of the report contrasts with consumers’ spending behaviour in recent months. Retail sales exceeded pre-pandemic levels in July and August, and restaurants reported strong take-up of a government incentive to dine out.
For some households, savings rose considerably during the lockdown as outgoings for commuting fell sharply and there were few chances to spend on holidays or socialising.
This effect may now be starting to unwind, and future government support looks almost certain to be less generous than the current furlough scheme which guarantees 80% of wages, up to 2,500 pounds a month.
Reporting by David Milliken, editing by Andy Bruce