Households 'pessimistic' about financial prospects for 2016

Households are downbeat about their financial prospects for 2016 despite the squeeze on them easing to its weakest levels in five months in December, a report has found.

The index from financial information services provider Markit found that households reported that the financial pressure on them was weakest since July.

The overall reading for the index in December was 45. Readings above 50 signal that people's financial situations are improving, while ones below this level mean they are getting worse. In November, the reading was 44.1.

Several factors meant that the squeeze on financial wellbeing eased in December, Markit said.

The amount of cash that people said they had available to spend fell at a relatively slow rate, while people's incomes from employment picked up and job insecurity was at its lowest level since the survey started in early 2009.

Households in the West Midlands were the least downbeat, while those in the North East saw the steepest fall in their finances, the report found.

Meanwhile, there was renewed pessimism over people's prospects for the coming 12 months. The index for the next 12 months fell to a negative reading of 49.4, from a positive reading of 50.4 in November.

The fall in sentiment was driven by public sector employees, the report said, as private sector workers were more upbeat than the previous month.

The survey asked 1,500 people aged between 18 and 64 years old from across Britain about their financial situation.