Brutal Report Exposes The One Big Flaw With The UK Economic Recovery

There’s tons of data pointing to an economic recovery in the UK.

There’s just one problem: this chart.

According to households, they’re badly getting squeezed.

From the survey:

Households reported a tighter squeeze on their cash available to spend during November, which contributed to the most marked drop in savings seen so far in 2013. The latest decline in cash available to spend was the sharpest since April, with 33% of respondents noting a reduction and only 8% an increase. Reduced savings and falling cash availability continued to dampen households’ appetite for major purchases in November. Moreover, the latest index reading signalled the weakest appetite for major purchases so far this year.

This is a well known problem in the UK, that inflation (although it’s been fairly subdued) has consistently outpaced income growth.

From IBTimes UK:

UK inflation fell back sharply in October, though it still continues to far outpace wage growth as the country’s income squeeze maintains its grip on households. Consumer Price Index (CPI) inflation was 2.2% during the month said the Office for National Statistics (ONS), down from September’s 2.7%. Regular pay growth stuck at around the 1% mark, leaving many with higher bills but less wages with which to pay them.

In the survey above, household inflation expectations hit a 6-month high, contributing to the sense of deteriorating finances.

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