Families still feeling the pinch despite signs of economic recovery

The Momentum UK Team 17 March 2014

Despite “green shoots” in the economy, new figures suggest that many households are still finding their income squeezed.

Family Finances Report from Lloyds Bank reveals that 38% of families say that money is still tight, with 43% of respondents not feeling positive about their finances for 2014. Just under one in ten (8%) respondents said they don’t have enough money to meet their current outgoings.

This year’s report shows a very slight improvement on figures from January 2013, when 50% of people said they weren’t feeling optimistic about their finances - compared to 43% this year.

The economy is showing signs of recovery; in the three months to December last year GDP grew by 0.7%, and in January this year inflation fell below the Bank of England’s target rate of 2% for the first time in over four years. The number of people out of work also fell by 180,000 in the twelve months to December last year, and average house prices rose by over £12,500 in the twelve months to January.

In spite of these “green shoots”, in January this year 17% of families - almost one in five - said they were still spending all their monthly income on household bills. A further 42% said they spend three-quarters of their income on everyday living costs, with 28% saying it has become more difficult for them to repay debt in the last twelve months.

The report also highlighted regional differences; families in the North West were the most likely to spend at least three quarters of their household income on bills - 68% in this region claimed to do so - compared to 52% of Londoners.

Simon Kenyon director of everyday banking at Lloyds, commented on the report:

“Family purse strings have been under strain for some time and improvements in the wider economy have not yet taken the pressure off household finances. However, there are signs of change as the economy recovers. Families are planning to save more and expect higher disposable income over the coming months.”