Decline in family finances speeds up, Markit survey finds.

The Markit household finance index has fallen for the third month running. Photograph: Graham Turner for the Guardian

Household finances in Britain are deteriorating at a faster rate than at the height of the recession in 2009, while hopes that exports would take up the slack and get the economy back on track are thwarted.

A household finance index from financial information firm Markit has fallen for the third month running to its lowest level since the survey was first compiled in February 2009. Almost 40% of households, whose spending accounts for two-thirds of the economy, saw their finances worsen between July and August, compared with fewer than 6% who reported an improvement.

The findings will do little to soothe nerves in the financial markets where investors have been panicked in recent weeks by poor data, prompting fears about a slowdown in western economies and the continuing European debt crisis.

Last week the FTSE 100 index fell more than 5%, and traders will be braced for the prospect of more sell-offs when the markets open again today.

"With a global economic slowdown and an escalating eurozone debt crisis lapping on the shores, it was unsurprising to see households' appetite for major purchases reverting to its lowest since the start of the year," said Tim Moore, senior economist at Markit.

Moore noted that August saw the steepest drop in take-home pay for nine months, and this reduced income was squeezed further by rising prices, with the rate of consumer prices annual inflation now running at 4.4% – or 5% on the retail prices index including housing costs. As a result, household savings and cash available to spend fell at the fastest rates in the survey's two and a half year history.

With consumers increasingly stretched, the British economy is becoming more dependent on exports to drive the recovery. But separate research from thinktank IPPR reveals Britain is failing to export its way to economic recovery.

The latest government figures show that after growing strongly last year, exports stalled in the first half of 2011. The IPPR says fewer than 7% of UK exports are going to Brazil, Russia, India and China – the so-called Bric economies. It argues that Britain is missing out on trading with these emerging markets and is being left behind by Germany and the US.

The report shows the UK share of global exports has dropped from more than 10% in 1950 to less than 3% today. The percentage of UK exports going to Belgium and Luxembourg – 2.9% – is almost double the percentage of UK exports to China, and yet the combined GDP of Belgium and Luxembourg amounts to less than one tenth of China's.

German exports to China totalled €53.5bn (£47bn) last year, up 44% on the previous year. The total value of German exports is more than double the value of British exports, despite the German economy being only one-third larger than the UK's. Even during the 2008-09 slump, German exports to China increased. This is partly because Germany mainly exports manufactured goods while Britain tends to export services. US exports to China are also proportionately greater than those of the UK, and Britain has invested less in China than Japan, the US and Germany.

The IPPR points to low levels of business investment in the UK (it is bottom of the league in the G7 for investment as a percentage of GDP), and notes that Britain also ranks behind most other industrialised nations in terms of infrastructure quality. Despite improvements over the past decade, productivity is lower than in the US, France and Germany, partly owing to a skills deficit – 30% of adults have low or no qualifications, twice as many as in Germany and three times worse than the US.

Tony Dolphin, IPPR associate director, said: "Economic success means looking to what needs to be achieved over the next few decades not the next few years. The UK economy has serious structural challenges that require an active industrial policy to tackle them. Only then will the UK survive 'the Asian century'.

"For example, Britain needs a state investment bank, like they have in Germany and Scandinavian countries, or even a major state-led investment fund, like in France … Other policies that should be considered are an expansion of the export credit guarantee scheme, greater efforts to identify and provide companies with the skills that will be needed to compete and a change to enterprise zones policy to strategically focus on innovation."

A separate survey from the manufacturers' organisation EEF and Royal Bank of Scotland shows that the soaring cost of raw materials such as metals and food ingredients has prompted manufacturers to redesign products or processes, seek different sourcing options or replace some materials with cheaper alternatives.