Households from United Kingdom worries over financial matters eased up to their lowest since June, a survey showed on Monday.
This alleviation happened in spite of the Bank of England’s tendency to impose higher interest rates and rely on debts to make up for falling employment income.
The IHS Markit Household Finance Index soared to 43.8 in October from 42.8 in September, making it as a mark of recovery from the third quarter, which was recorded as the weakest since 2014.
A score not equal or exceeding 50 indicates negativity among households in the United Kingdom, and the aforementioned score suggested that pessimism is easing towards finances in the coming 12 months.
According to Markit, the survey’s result and the improvement this month reflected the increased upbeat mood regarding 2018’s economic outlook, as well as the households’ increased willingness (and eagerness) to spend on cars, holidays, and household large goods.
On the other hand, even if workplace activity and productivity have increased and inflation expectations are softening, households still reported a fall in income for the first time since the start of this year.
“The gap between rising spending and falling income may have been bridged with increased borrowing. Latest data also suggested easier access to unsecured debt,” the report said.
The EEF trade association and the bank Santander also released a separate survey on Monday, and it showed that investments had slowed down during the current year.
However, the proportion of manufacturers planning to invest further over the next couple of years had increased to 51 percent from 43 percent in 2016.
“With global demand on the up, conditions should be ripe for industry to make new investments in capacity and productivity enhancing technology. But Brexit means the future outlook for investment is not clear cut,” said Lee Hopley, who is an EEF economist.
The Bank of England is sticking its hopes to a solid consumer demand, which it hopes to fuel the economy’s growth in spite of the current dull investment situation.
It also has shown unsecured household borrowing swelling at an annual rate of nearly 10 percent in the previous months, only slightly inched down from an 11-year high recorded last year.
In the beginning of this month, lenders told the Bank of England that they are thinking of limiting access to unsecured credit, following the concerns regulators raised about the plummeting credit standards. They have also advised banks to set aside more capital as a safety measure in case of future losses.
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