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Dip in household budget confidence

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Worries over the economic outlook were heightened with news that household budgets are under the greatest pressure for almost two years.

According to the Markit household finance index, anxieties about job losses and the wider economy have seen confidence in personal finances slip in 34 per cent of households.

This is the lowest level recorded since March 2009.

Tim Moore, a senior economist at Markit, said: “An unhealthy combination of high inflation and job worries has caused households to report that their financial outlook has slumped back to the levels seen during the worst part of the recession in early 2009.”

The gloomy figures were backed up in a separate survey. R3, the finance group, reported that 43 per cent of respondents to its latest poll believe that their personal finances will deteriorate over the next six months.

This represents an increase of 13 per cent on findings for the previous quarter.

Fewer than one in four people questioned think that their financial situation will improve over the coming months.

Steven Law, the president of R3, said: “Since we last carried out the survey, people have seen a rise in the cost of living, from the VAT increase; to the rise of fuel and utility costs. This has happened against a backdrop of pay freezes, pay cuts and, in some cases, redundancies, so it is understandable that many are feeling pessimistic about their financial outlook.”