Government austerity measures dent UK confidence

Worried Person

The Coalition Government’s austerity measures are having a marked effect on the confidence of both businesses and households within the UK.

Research conducted by a number of sources, including YouGov and Markit, has shown that households around the UK are living with the worry that their standard of living is set to see a steady decline as pay rises falter and inflation continues to rise.

Markit and YouGov recently conducted a Household Finance Index survey, and 86 percent of the respondents were certain that their cost of living would rise in the next year.

On the business side Grant Thornton and the ICAEW found similar results, with around one fifth of all businesses less confident of their imminent fortunes than they were earlier in the year before the Coalition came into power.

The new Government has a large deficit that they must attempt to bring down, and two of their main weapons against the debt are raising taxes and widespread spending cuts. However it seems that these main aspects are leading to nationwide financial uncertainty. VAT will soon go up, meaning that everyday goods will cost more, and it is estimated that around 600,000 workers in the public sector will find themselves unemployed within the coming five years.

Representatives from the respective agencies offered their thoughts on the different findings: “Stronger growth in the UK economy has done little to put a floor under the downturn in household finances, said Markit economist Tim Moore, and chief executive of ICAEW Michael Izza said: “UK businesses that came through the recession are now facing the challenge of surviving the recovery.”