'Improvement' in household finances.

There was some good news for households in October as they saw the slowest deterioration in their finances in almost two years, a study has revealed.

The Markit household finance index found the weakest squeeze on family budgets since December 2010 was helped by employment income nearly stabilising and the biggest drop in debt levels for just over two years.

However, despite this improvement, fears have grown that finances will take a turn for the worse in the not so distant future.

Just under half of households (45%) expect their financial wellbeing to worsen in the next 12 months, while only 20% anticipate an improvement.

Concerns regarding higher living costs were a big issue, with more families expecting a rise in living costs during the next year compared to the previous month, said the study.

All income groups, age ranges and job sectors expressed such worries about the future financial outlook, with people living in the east of England, Scotland and the North East respectively found to be the most pessimistic.

Copyright Press Association 2012