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Household finances at all-time low

Finances in 40 percent of all households deteriorated between July and August, according to the latest Markit household finance index, which found that consumers have suffered the fastest fall in all available cash since February 2009.

Tim Moore, senior economist at Markit, said: 'With consumer spending accounting for around two-thirds of UK gross domestic product, this does not bode well for the second half of the year. It is likely that the UK economy will be increasingly dependent on external demand.'

The gloomy figures applied to all age and income groups from all regions, though those living in the north seem to be suffering more than their southern cousins. And the prospect of a double-dip recession and fears over the Eurozone crisis are hardly making things any better. Markit predicts that the pressure on purchasing power will not ease in the short term, with inflation predicted to reach 5 percent later on this year.

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