Figures show little change in expectations for households after Brexit vote


Households' expectations about their finances have held steady despite the "surprise" Brexit vote, a survey suggests.

The Markit Household Finance Index said the current financial strain on households remains "relatively muted", with a stable picture emerging amid rising workplace activity and low inflation.

The index posted an overall reading of 44.8 in September, showing little change from a reading of 44.9 in August.

Readings above 50 suggests households' financial situations are improving and ones below this level suggest they are getting worse.

While the latest reading suggested households are continuing to feel under financial strain, pressures have been "relatively muted throughout 2016 on average, even in the face of June's vote to leave the EU", the report said.

The report is based on a survey of 1,500 people across Britain aged 18 to 64. 

It found expectations for finances in 12 months' time also remained broadly steady, with a reading of 49.6 pointing to only a slightly downbeat financial outlook.

Construction sector workers were the most upbeat about their financial prospects, while manufacturing employees were also relatively optimistic.

By contrast, those working in finance and business services had the bleakest outlook since May 2012.

Growth in workplace activity was sustained in September, marking two months in a row of expansion, the report said. The sharpest increase was in the manufacturing sector, while retail was the only sector to see a fall in activity. Income from employment increased for the sixth month in a row.

Current and future inflation perceptions eased in September. Households suggested current price pressures were the weakest in six months. Expectations for living costs in 12 months' time fell to their lowest levels since January.

One in four (25%) people surveyed expect the Bank of England's next move on interest rates to be a cut, compared with 39% who said this in August.

Philip Leake, an economist at IHS Markit, said: "Barring a minor dip in July, UK households' financial expectations have appeared largely unmoved by June's surprise Brexit vote."

He continued: "A swift monetary policy response and a more settled political picture have likely helped to allay fears of a severe downturn...

"With inflation remaining low in spite of the weak pound, and confidence in the economic outlook partially restored, households revised their expectations of a further cut in the base rate.

"Around 39% had expected interest rates to fall again rather than rise in August, but this proportion dropped substantially to 25% in September."