by business editor Trevor Sturgess

An influential survey has found the least downbeat financial outlook in nearly two years, with consumers feeling less squeezed on spending power.

The gloom surrounding household finances has begun to lift, according to a survey.

The Markit Household Finance Index found the least downbeat financial outlook in nearly two years, with the slowest deterioration in finances for 14 months.

Cash availability is at its highest since the VAT rise in January last year and the public is less fearful about inflation.

According to data collected between February 8 and 13, consumers feel less squeezed on spending power, with household debt stabilising.

Households overall were less pessimistic about their financial prospects. although 43% still anticipate their finances will worsen, while 28% expect an improvement.

People with a mortgage feel more confident interest rates will stay at a record low. The most dismal findings came from people in social housing who expect their financial situation to worsen.

Savings have increased, especially among higher earners who saw the fastest rise since September 2010, with 27% reporting an increase and only 20% a fall. By contrast, low income groups reported respective figures of 7% and 38%.

Job security remains an issue, with construction and retail workers most fearful about redundancy. For the first time in two years, private sector employees were more downbeat than those in the public sector.

Tim Moore, Markit senior economist, said: "February's survey adds to the tentative signs that falling inflation has alleviated some of the squeeze on household finances and lifted expectations from the record lows of late last year."

But he added: "Stretched incomes mean that household finances will remain under pressure until we see a sustained upturn in overall economic conditions."

The survey was conducted by Ipsos MORI, which interviewed an online panel of 1,500 adults aged 18-64.