U.K. households are more pessimistic about their financial prospects than at any time in the last nine years as the cost of living crisis intensifies, a survey showed Wednesday.
The report from YouGov Plc and the Centre for Economics and Business Research showed overall consumer confidence dipping in January, with households also becoming more concerned about job security.
The downturn reflects the pressure on family budgets from soaring inflation and planned tax increases. Households received a further blow this month, when the Bank of England raised interest rates and it was announced that domestic energy bills will go up by more than 50% in April.
The BOE expects inflation to peak at over 7% in April, leading to the biggest drop in disposable incomes for at least 30 years.
A reading of how households expect their financial situation to change over the coming year made for “particularly stark reading,” dropping by almost 5 percentage points from December to the lowest level since late 2013, said Sam Miley, senior economist at Cebr.
An overall measure of confidence fell 1 point to its lowest since March. While most readings that make up the index declined, there was continued optimism about the housing market.