Households `took on more debt in June`

Savings fell while household debt levels increased in June, compared with the previous month, according to the latest Household Finance Index by Markit.

36% of households questioned for June`s survey reported a worsening in their finances, compared with just 6% who said their situation had improved.

Households saw the second-fastest rise in household debt since the survey began almost two and a half years ago, with one in five indicating an increase compared with 15% who said their debt had fallen.

Overall, households saw the fastest deterioration in their finances since March 2009, the report added.

Tim Moore, Senior Economist at Markit said: "The decline in the index pours cold water on the tentative signs of improvement seen in the previous month. The grim figures show household finances deteriorating at the fastest pace since early 2009, with people eroding their savings and taking on more debt to finance strong rises in living costs, as income from employment continued to fall in June."

A growing number of respondents noted a worsening in job security (22%), with only 6% saying they felt more secure in their job.