Show Hide image

Household finances deteriorate after improvement in February

The squeeze on household budgets was felt more strongly this month than last.

British household finances deteriorated at a slightly faster rate in March than February, with a third of households feeling downbeat about and their incomings and outgoings, a new report by Markit Economics has shown.

The Household Financial Index, a monthly survey of consumer behaviour, dropped from February's 14-month high of 38.7 to 37.8 this month. An index reading below 50 indicates deterioration in sentiment, while numbers higher than 50 suggest improvement. However despite this continued squeeze on personal finances, other sub-indices for March showed mild improvement.

Jack Kennedy, a senior economist at Markit said:

Although households remain under considerable financial pressure, some green shoots of hope are in evidence as we move into spring. Sentiment edged lower in March but remains better than at any time during 2011, and particularly compared with the lows seen late last year at the height of the euro debt crisis worries.

General unemployment in the UK currently stands at 8.4 per cent -- rising to 18.9 per cent for recent graduates -- yet the job security index reached a two-year peak following an increase in workplace activity levels. Household spending also appears to be stabilizing this month, after falling consistently since the beginning of 2012.

Among British households concerns about inflation -- at their highest in six months -- . Kennedy said:

Current price perceptions and future inflation expectations both moved higher [in March], in part related to recent increases in petrol costs. If the predicted fall in inflation fails to fully materialise this year, weak pay growth means that households will continue to see their finances squeezed from all sides.

Alice Gribbin is a Teaching-Writing Fellow at the Iowa Writers' Workshop. She was formerly the editorial assistant at the New Statesman.

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.