UK outlook downbeat amid falling footfalls in high street

After a period of optimism a change in mood over the economic outlook is apparent in the UK, which will come as a disappointment to economists. The development comes after a survey showing a 3.3-per cent drop in footfalls at high street retailers, the worst January performance in three years.

According to Markit's household finance index, 41 per cent of the 1,500 respondents in the survey expect their finances to worsen over the year ahead, as against only 23 per cent who expect an improvement.

Lower income earners took a pretty hard hit in February, with those on incomes of £15,000-£23,000 experiencing the tightest financial squeeze in the four-year history of the survey. It also found evidence of a widening income divide, with those drawing over £57,750 seeing their incomes decline at the slowest pace of income contraction in a year.

The lowest earners were also the most downbeat, with 57 per cent expecting worsening of their financial position in the year ahead, while those on the highest incomes had a neutral outlook.

Rising rents, food costs and energy bills have added to the economic woes, while average wages have increased only 1.4 per cent – below the pace of inflation.

According to Tim Moore, senior economist at Markit, there was no let-up in the squeeze on UK household finances during February, as higher living costs and muted wage trends combined to reduce cash availability at the fastest pace since mid-2012.