British households remain downbeat about their financial prospects due to the damage caused by COVID-19, but are less pessimistic than in May and April when sentiment sank to its lowest in more than eight years, a survey showed on Monday.
IHS Markit’s monthly Household Finance Index for June was in line with other data which has suggested a moderate recovery since economic output collapsed by a historic 20% in April when swathes of businesses were shuttered.
The index rose to 40.7 in June from 37.8 in May, but remained below its pre-COVID average of just under 45.
“It is reassuring to see the … index rebounding in June, as it suggests that the financial hardship endured during the height of the lockdown is easing. However, it appears that households are still faced with a number of difficulties,” IHS Markit economist Joe Hayes said.
Households are highly concerned about job security, according to the survey of 1,500 adults contacted online between June 11 and June 15.
More than 9 million jobs have been furloughed under a government scheme which pays people 80% of their normal salary. But that support is scheduled to end in October, before some sectors such as hospitality are likely to be operating normally.
Last week the Bank of England said it would buy an extra 100 billion pounds of government bonds over the rest of this year to boost the economy and keep borrowing costs low.
The central bank said the coronavirus lockdown had caused a slump that was historic in scale, if slightly less deep than it previously feared, and that a full economic recovery was not certain.
“If households are fearful for their job security and their incomes are falling, the UK’s path of recovery could be a slow one,” IHS Markit’s Hayes said.
