UK household finances worsen in August

The financial health of British households deteriorated in August at a faster pace than last month, in an unpromising sign for the economic recovery from the COVID-19 pandemic, a survey showed on Monday.

The Household Finance Index from data company IHS Markit fell to 40.8 in August from 41.5 in July, dragged down by the biggest drop in job security since 2011. A wave of layoffs is already underway and economists fear worse will come when the government's furlough scheme closes at the end of October.

Although economic output collapsed by a historic 20% in the second quarter of 2020, the official unemployment rate has not risen from its pre-pandemic level of 3.9% due to the furlough scheme as well as quirks in joblessness definition.

Earlier this month, Bank of England Governor Andrew Bailey said the central bank's projection for an unemployment rate of 7.5% at the end of this year was a "very bad story" for the British public, and warned that it could turn out worse than that.