Markit: Households optimistic about finances in 2014

Households are feeling more confident, thanks to greater job security

Households across the UK are feeling more positive about the outlook for their finances than at any time since 2009, according to new research.

The Markit Household Finance Index (HFI) showed that optimism about current finances is also at a high.

The HFI, which is based on a survey of 1500 UK households, rose to 42.1 in February from 41.7 in January.

Any figure under 50 reflects a deterioration in finances. Over 50 reflects an improvement.

But while families feel their current finances are getting worse, their expectations of the year ahead are positive for the first time since the survey began.

The Future HFI, which measures people's outlook for the next 12 months, hit 50.7 in February, a considerable leap from 46.1 in January.

Households were also more optimistic about job security than at any time since the survey started five years ago.

"The tide has started to turn for UK household finances," said Tim Moore, Markit's senior economist.

"Falling inflation and improvements in labour market conditions helped reduce the squeeze on budgets to the lowest for at least five years in February," he said.

Floods

However, the research gave an early indication that the economy in south-western England has been hit by the severe weather.

While economic activity increased in the country as a whole, it declined in the South West.

The region's SW Workplace Activity index dropped from 55.4 in January to 48.3 in February.

"The recent storms and unusually wet weather have caused a temporary setback for retail sales and business activity across some parts of the UK," said Markit's Mr Moore.

"In particular, people living in the South West reported a marked dip in their workplace activity during February," he said.