A survey has found that most UK households expect borrowing costs to rise again following an interest rate increase in November, according to Reuters.
The Household Finance Index from data company IHS Markit fell to a seven-month low on January, from 42.9 in January to 42.2 in February. The index is seen as a gauge of financial wellbeing.
The survey was taken over six days starting on 8 February 2018, the day the Bank of England announced interest rates would rise more and sooner than previously expected. Researchers found that over 60% of households believed another rise would come within six months, up from 45% in January.
In 2017 the UK economy saw slowing rates of growth as higher inflation caused by a post-Brexit weakening of the pound began to bite on consumer spending power. The Bank of England has said it expects this pattern to ease off in 2018 as inflation slows and wage growth rebounds.
However, the survey results showed a nation in a gloomy mood. There was only a weak rise in income from employment in January, which could dampen the Bank of England’s expectation of wage growth in 2018. Figures from the Chartered Institute of Personnel and Development showed major employers expect to offer below-inflation pay rises in 2018.
In contrast, a Bank of England survey of major employers in the private sector suggested this year could see the largest pay rises in a decade, reaching 3.1%.