British working-age households are growing more cautious about making major purchases amid concerns about Brexit and a possible recession, a monthly consumer survey showed.

The headline index from the survey, the seasonally adjusted IHS Markit Household Finance Index (HFI) – which measures households’ overall perceptions of financial wellbeing – recorded 43.7 in August, a decrease from July’s 44.3, therefore signalling a stronger degree of pessimism towards current finances by UK households. The headline index registered the lowest reading in three months and was back below the average seen in 2018 (44.2).

The dip in current household sentiment also filtered through to financial wellbeing expectations. Having been in positive territory during June and July, UK households signalled a negative outlook towards their financial health for the year ahead in August.

Households’ views on next move in Bank of England base rate

A decisive shift in UK household interest rate expectations was recorded on the likelihood that the next move will be a cut. The proportion of UK households which foresee the next action by the Bank of England being an interest rate decline rose to nearly 23%, from approximately 16% in July, its highest since October 2016. Nonetheless, the majority (68%) of UK households expect the Bank of England will raise interest rates within the next two years. This was down from around 74% in July.