Households worried about their finances, but hopeful of rate cuts

British households are still feeling gloomy about the economy, but confidence is improving.

According to S&P Global Market Intelligence, many people are spending less because they don’t have much spare cash.

Meanwhile, some are having to dip into their savings to make ends meet.

People becoming ‘less downbeat’

Maryam Baluch, an economist at S&P, said limited cash is making households cautious, especially when it comes to big purchases. 

However, she noted that higher incomes are helping to ease some of the pressure and that households are becoming “less downbeat” about their financial prospects.

“Encouragingly, households are feeling secure in their roles for the first time so far this year,” Ms Baluch commented.

This, she stated, suggests that “concerns over lay-offs relating to higher NI contributions and other wage-related measures reported in last year’s Budget have calmed”.

Figures showed that private sector workers in particular feel more secure about keeping their jobs, although job concerns still weigh heavily among people in the public sector.

Households hopeful of interest rate cuts

Ms Baluch added that many households believe that interest rates will continue coming down over the next few months, which could encourage people to spend more and make it easier for them to get loans.

Earlier this month, the Bank of England cut interest rates by a quarter of a percentage point to 4.25%.

This was the second rate cut this year and the fourth time they’ve been reduced since they peaked at 5.25% last year.