The UK Household Finance Index rose to a 12-month high on Monday, new data revealed.
Indeed, the IHS Markit UK Household Finance Index rose to 44.6 in January, up from 43.2 recorded in December and the highest it’s been in 12 months.
The survey measures households’ views on financial wellbeing.
The figure is “indicative of an easing of pressure on UK household finances,” the report said.
The new year has begun with some form of political stability, following the chaotic nature of the UK’s political landscape last year.
Indeed, 2019 saw several extensions to the Brexit deadline, an attempt to prorogue parliament and a general election, with political and economic uncertainty hitting various sectors.
The UK retail sector was one of the many to be hit by uncertainty. Data revealed in January that UK retail experienced its worst year in 2019.
“Latest survey data certainly show some post-election bounce for UK households, with the headline index up to a one-year high and house price expectations at their strongest since October 2018,” Joe Hayes, Economist at IHS Markit, which compiles the survey, provided a comment.
“That said, cooling inflation was most likely the real driving force, propping up real earnings and disposable incomes,” Joe Hayes continued.
“A rising proportion of UK households showed that they are in tune with the downbeat message from several monetary policymakers in the last couple of weeks, with almost one-in-four now expecting the Bank of England to cut interest rates as their next move.”
Joe Hayes said: “It therefore seems the case that, while falling living cost pressures are stimulating purchasing power, UK households are aware that weak economic conditions have led to an increased likelihood of lower interest rates. How this will impact consumer spending behaviour will be crucial to the UK’s growth prospects.”