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Equilibrium’s finance and investment news roundup

This week’s roundup includes news of a squeeze on spending for many UK households, suggestions that poorer households are failing to take out contents insurance, continued calls for more house building and criticism of credit card companies for failing to notify customers of limit increases.

UK households ‘feeling pinch as budget nears’

British households are feeling more of a squeeze on their finances in November, a survey by data firm IHS Markit showed this week.

The IHS Markit Household Finance Index for November fell to 43.4, reversing some of October’s improvement to 43.8, and respondents to the survey were their most pessimistic about the outlook for their finances since June.

The report is likely to put more pressure on Chancellor Philip Hammond to outline measures to help voters cope with the rise in inflation and slow growth in their wages. The Finance Minister has been urged by some members of the Conservative Party to use his budget to help struggling households.

According to the IHS Markit survey, the pace of spending growth by households slowed in November, possibly reflecting banks reining in their credit, as well as the fall in consumer spending power.

In separate research released this week, a report by university academics said the impact of inflation due to last year’s Brexit vote was costing the average worker £448 per year, equivalent to almost one week’s wages when adjusted for rising prices.

Insurance gap ‘penalising poor households’

As many as 16 million people in the UK have no contents insurance and do not have enough money in their savings to replace damaged or stolen household goods, a new report has shown.

According to research from the Financial Inclusion Commission, 60% of individuals earning £15,000 or less had no contents cover.

The commission said that only a quarter of people living in social housing had enough in savings to replace a washing machine. The report also noted that those on lower incomes were also at increased risk of burglary, arson and flooding than the average household.

However, the commission found that many struggled to afford insurance cover and did not trust the insurance industry.

Sir Sherard Cowper-Coles, who chairs the commission, said: “For many, insurance is an unaffordable or unobtainable safety net. The government must push for a strategy that widens access to quality cover, so that everyone has immediate access to a capital buffer in case of loss.”

Number of new homes in England ‘close to pre-crisis high’

The number of new homes coming onto the market in England reached 220,000 in 2016-17, just short of the pre-financial crisis peak of 223,530. According to official statistics, the figure is still below the roughly 250,000 homes per year that experts and politicians say the country needs to keep up with demand.

In 2016-17, the number of additional homes stood at 217,350, representing an increase of 27,700 from the previous year. Chancellor Philip Hammond is under pressure to invest more money to boost housebuilding in his budget statement this week.

Demand for homes has continued to outstrip supply, particularly in London, which has resulted in higher prices and rents. The number of new homes coming onto the market in England stood at 217,350, with the figure comprising 183,570 new homes, but also around 40,000 properties that were converted from other uses into homes.

A lack of affordable homes has forced many younger people to live at home with their parents for longer, rent well into their 30s or buy properties further away from where they work, which has meant the issue has become increasingly high on the political agenda.

Credit card limits ‘need control’

More than a million credit card users who are struggling with their finances have had their credit card limits increased without being consulted, a charity has said.

According to research from Citizens Advice, based on a sample of 1,300 people with credit cards, as many as six million cardholders have had their credit limits put up without their consent in the past year - and around 1.4 million of these are struggling financially.

The charity warned that such borrowing could make their financial problems worse. As a result, Citizens Advice is calling for a ban on unsolicited increases in credit card limits and for Chancellor Philip Hammond to include such a policy in the Budget.

Providers have agreed to the creation of a voluntary code, developed by the Financial Conduct Authority, which would see restrictions on credit limits. As part of the plans, they will start to ask new customers for their consent before raising limits, and will give them the option to carry on receiving uninvited increases. Existing customers will be given the option to ask their lender to require their consent. 

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