Only six per cent of British households are more financially secure now than they were in May, while 36 per cent are in worse shape than before, according to data collected by Markit.
As predicted by the Office for Budget Responsibility (OBR), an inflation rate of 4.5 per cent - more than twice the government target - is forcing people to put themselves further in debt just to keep up. The high inflation rate means prices are outpacing wages, meaning consumers are getting less and less value for their money, and almost 90 per cent of the 1,500 questioned by Markit expect living costs to rise even higher next year.
The OBR expects another £500 billion - £20,000 per family - of borrowing over the next four years, and a 15 per cent increase of debt as a proportion of income by 2015. If the latter prediction comes true, debt as a proportion of income will surpass the record of 173 per cent reached during the height of the crisis in 2007.
“It may be summertime but the living is far from easy,” said Markit economist Tim Moore, waxing lyrical in spite of the grim prospect. “The decline in the index pours cold water on the tentative signs of improvement.”
