Monday 22 October 2018 4:10 pm | Updated: Tuesday 21 May 2019 4:22 pm

British household savings declined in October

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British household savings declined this month as salary growth slowed to the weakest rate in eight months, according to a survey of household finances.

The IHS Markit Household Finance Index declined to 45.1 in October from 45.7 the previous month, signalling increased pessimism by UK households towards their financial situations.

The negativity was driven by weak employment income growth, however the index showed that households increased spending in October using both savings and unsecured credit.

Optimism about house prices was also at its lowest level since immediately after the EU referendum.

“UK households casted their most downbeat assessment of current finances in three months in October as weaker earnings growth from employment limited cash availability," said IHS Markit economist Joe Hayes.

"Looking ahead, households were more concerned about their future budgets. Sentiment may have been impacted by the property price outlook dropping to the least optimistic level since the Brexit vote.

“Nonetheless, the negativity towards current finances was relatively modest. The dip in official UK inflation statistics caught markets off-guard last week, but households surveyed in October by the HFI pared back their inflation expectations to the lowest in two years. Households were also less concerned about job security, encouraging them to use savings and unsecured credit to offset weaker employment earnings.”