The disparity in income between the UK’s highest and highest earners has increased says a leading global financial information service.
Their survey also shows that the deterioration in household incomes looks set to continue in the coming months.
The Markit Household Finance Index (HFI) is intended to anticipate consumers’ future behaviour. The index for November 2011 based on the responses of 1,500 adults aged between 18 and 64 across Great Britain now stands at 34.6 compared to October’s 35.0. When you consider that a figure of 50.0 is the ‘no change’ point and numbers below 50 shows a worsening position you can see how badly people think we are doing.
Some 37% of respondents said their financial situation had worsened since October with only 6% seeing any improvements.
But this was not uniform across all income groups. 51% of those on less than £15,000 a year had seen things getting worse and only 2% saw an improvement; this band has an index of just 25.5. But in the highest income band (over £57,751 a year), which has an index of 47.3, 19% saw a deterioration and 14% saw improvement.
This is the widest gap in HFI since the index started and pessimism outweighs optimism by a factor of two at 48% to 24% respectively.
There is also a drop in reported savings and a willingness to spend, across the board and especially in the young (18-24 year olds).
Senior Economist at Markit, Tim Moore, said “The latest gloomy snapshot of UK household finances is all too in keeping with the recent economic news at home and across the rest of Europe. While all eyes are on whether the UK economy will double-dip, the latest survey is a timely reminder that the household recession hasn’t even paused for breath.”
The Markit Household Finance Index is put together monthly using data from Ipsos Mori and has been running since February 2009.