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Household finances continue to deteriorate

Household finances continue to deteriorate

Category: Money

Updated: 18/02/2013
First Published: 18/02/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Household finances worsened during the fourth quarter of 2012, as a result of high mortgage service costs, poor equity market performances and high inflation, according to Alliance Trust's UK Financial Reality Index.

During the final three months of last year, the company's index was found to have fallen from 87.8 to 84.4, representing the lowest level seen since the second quarter of 2012.

The Household Budget Index dropped from 88.8 to 86.8 during quarter four of last year, its lowest level since quarter two and remains below the 'critical' level during every quarter since the beginning of 2010.

Ongoing uncertainty in the economy and continued poor financial conditions impacted on consumer confidence, with consumer spending reported as being "relatively muted" during the first month of this year.

Chief executive at Alliance Trust, Shona Dobbie, said: "The economic background remains challenging: household budgets are still under considerable pressure, and net wealth has been impacted by both a lower level of equity market performance and a lower level of house price inflation."

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