British Households Gaining Confidence About Financial Wellbeing In The Coming Months
18 Feb 2020
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- Both the Household Finance Index and the Future Household Finance Index have reported an improvement in household confidence about their financial wellbeing right now and over the next 12 months.
- The HFI and FHFI stood at 47.6 and 52.7 points in the month of February, higher than January however still below the 50-point neutral mark.
- Experts believe this improvement has come from improved business confidence stemming from a stable political environment after the December elections, all of which have boosted consumer confidence in the economy as well.
Recently reported figures of the Household Finance Index (HFI), released by IHS Markit
, have shown that UK households have become more confident than ever about their financial wellbeing this month.
The HFI is a comprehensive measure that highlights the confidence households in the UK have about their financial condition. The index reports a number, and the higher this number, the more confident households are said to be about their finances.
This month, in February, the index has risen up to a record-high of 47.6 points, which is higher compared to the 44.6 points reported a month earlier.
However, this does not indicate that households are satisfied with their financial condition. A 50.0 on the index means neutral confidence in financial wellbeing, and the current score highlights the ongoing financial pressures households in the UK continue to face.
But, the recent improvement in score does show improvement. This improvement has also been reported in the Future Household Finance Index (FHFI), which is a measure of the financial health of UK households that may be expected in the following 12 months.
The FHFI stands at 52.7 points for the month of February, slightly higher compared to the 49.6 points reported in January. This is indicative of growing household confidence in the state of the UK economy, and the way it would impact their finances over the next year.
According to economist Joe Hayes, who works at IHS Markit, numerous factors have contributed to this boost in household confidence about their current and future financial situation.
Hayes highlighted that surveys conducted after the December elections have shown an expectation about the UK GDP picking up pace during the first quarter of this year. Also, respondents stated that living costs had slightly declined during the current month, thus releasing some of the built-up financial pressures on households. Households have also reported an improved sense of job security in February, reporting confidence that is at its highest point in the past 7 months.
Businesses have also shown improvement in productivity. According to the Bank of England’s governor, business confidence has improved
in the UK economy especially after the December elections, which has trickled down and boosted consumer confidence as well.
Britain had been on the edge with its Brexit decision for around three years, with businesses in a state of confusion about the adjustments they needed to make to cope with the post-Brexit business environment. Boris Johnson’s win in December put an end to such confusion.