Amid rising incomes, fewer Brits expect rate rise from Bank of England

British households reported the strongest increase in workplace activity in nearly two years, while incomes have risen at an elevated pace for the second month running, according to the latest data from the IHS Markit Household Finance Index.

However, despite the positive figures, UK households remained pessimistic towards financial conditions in the year ahead, according to the survey, and the IHS data does show a slight deterioration in household finances at the start of the second quarter.

The IHS survey also showed that fewer Britons are expecting an interest rate rise from the Bank of England (BoE). The data showed a a drop in the number of households expecting a rate rise in the near future, with only 28 per cent of respondents foreseeing a rate hike in the next three months, down from 33 per cent in March.

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The monthly survey of 1,500 people was conducted between April 12-16 – before BoE boss Mark Carney signalled last week that the central bank may not raise rates in May after all due to “mixed” economic data and Brexit concerns.

“Despite recent news that real pay is now on the rise again and unemployment is at 40-year low, April’s survey data reveal that UK households remain under significant financial pressure,” said Sam Teague, economist at IHS Markit, which compiles the survey.

“Partly reflecting softening inflation, the April survey revealed a drop in the number of households expecting a rate rise in the near future…That said, the vast majority of households remain confident towards interest rates rising further in the longer term.”

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