Commenting on the Bank of England’s NMG survey from its Quarterly Bulletin published today (Friday), which found increasing levels of financial distress among households in 2017 and more saying they expect their personal finance situation to deteriorate in 2018 than to improve, Matt Whittaker, Chief Economist at the Resolution Foundation, said:
“Today’s survey highlights a concerning deterioration in households’ personal finances over the past 12 months, which has contributed to the first rise in measures of financial distress in four years.
“While debt repayment burdens remain some way below the levels experienced following the financial crisis, it is worrying that the rise in distress has come against a backdrop of ultra-low interest rates that are expected to rise over the coming years.
“Households’ worsening personal finances and increased pessimism about Britain’s economic outlook suggest that the recent period of consumption-led growth may be running out of track.
“The survey also reminds us that while levels of indebtedness are often viewed through an interest rate lens it is the state of family finances – which have come under real pressure this year – that is the main driver of financial distress in Britain today.”
Key findings from the NMG survey:
- net balance of 8% of surveyed households say their financial circumstances deteriorated over the previous 12 months;
- net balance of 4% think things will get worse in the next 12 months (first time this measure has been negative since the question first appeared in 2015); and,
- net balance of 30% now say they expect the general economic situation to deteriorate in the next 12 months.