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UK Households Remain Gloomy At Start Of 2019

A measure reflecting UK households' perceptions regarding their finances in the coming 12 months remained subdued and they continue expect further deterioration in finances this year, survey data from IHS Markit showed on Monday.

The IHS Markit UK household finance index rose to a three-month high of 44.8 in January from 44 in December. However, the reading remained below the 50-mark, suggesting pessimism towards current financial prospects.

However, when compared with the average seen across 2018, UK households have started the year in a relatively upbeat manner, IHS Markit said.

In January, households remained pessimistic amid heightened worries over job security, lower cash availability and weakened optimism about the future of the UK housing market.

Weak sentiment persisted despite increased rates of growth in both earnings from employment and workplace activity, and paring back of inflation expectations. The survey showed that job security eroded at the fastest pace in 11 months.

The index reflecting households' expectations on financial health in one year's time edged up to 46.4 from December's four-month low of 46.2. These were among the weakest since the start of 2014.

The rise in housing costs was the weakest since October 2016. Living expenses are predicted to rise over the course of the year, but at a below average pace.

Property price expectations eased fractionally from December's six year low.

Around half, or 51.5 percent, of survey respondents predict an increase within the next six months, while a large majority, or 72.8 percent, of UK households foresee an increase at some point during 2019, IHS Markit said.

Close to one-tenth, or 9.6 percent, of UK households are now predicting the Bank of England will cut the base rate. This was slightly lower than seen during December.

"Political deadlock over Brexit merely adds extra uncertainty to an already unfavourable financial environment for UK households," IHS Markit economist Joe Hayes said. "However, improvements may come to the fore in coming months if uncertainty about the path of Brexit becomes more clear."

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