UK consumers saving less as taxes squeeze incomes, data shows

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UK consumers saved less money during the third quarter of the year as higher taxes squeezed disposable incomes,The households’ saving ratio – which estimates the percentage of disposable income Britons save rather than spend – dropped 0,7 percentage points to 9,5%, the Office for National Statistics said,That is the lowest rate for more than a year.

Real household disposable income per capita dropped 0.8% as taxes on income and wealth grew.Elliott Jordan-Doak, an economist at the consultancy Pantheon Macroeconomics, said the saving rate was still well above its average of 6.5% between 2015 and 2019.“But pre-budget uncertainty likely led consumers to pull back on spending in the fourth quarter as fiscal worries dominated the headlines for months on end,” he said.

It comes just weeks after the chancellor, Rachel Reeves, announced the government will freeze personal tax thresholds for a further three years, a move that will raise billions of pounds for public finances but will drag more workers into higher tax bands,The ONS confirmed on Monday that growth slowed to 0,1% in the third quarter, from 0,2% in the second quarter,The second quarter figure was revised down from a previous estimate of 0.

3% growth.Danni Hewson, of the broker AJ Bell, said the revision showed “just how difficult it is for the government to deliver on its pro-growth promises”.“It’s clear there are huge challenges to overcome if the UK’s growth story is going to become more compelling,” she said.“Persuading people to spend a bit more and encouraging businesses to dust off any expansion plans they’d set aside will require more than just a period free of destabilising speculation.“It will require inspirational leadership and a commitment to delivering some of the growth-focused changes that are already in the mix.

”Business groups have blamed Reeves’s £25bn increase in employer national insurance contributions (NICs) – announced in her 2024 budget – alongside the extended period of uncertainty before this year’s budget for putting the brakes on the economy,Last week, the Bank’s monetary policy committee voted to cut interest rates by a quarter point to 3,75%, the lowest level since early 2023,The cut was widely expected after official data showed inflation fell last month to an annual rate of 3,2%, from 3.

6% in October, helped by weaker food prices.That remained well above the Bank’s 2% target, set by the government, but suggested the Bank believed the worst of the inflation “hump” had passed.Jordan-Doak said that consumer spending could be stronger going into the new year after the government abandoned plans to increase income tax.“GDP growth should accelerate in the first quarter, with the budget now in the rear-view mirror,” he said.“That will boost the demand for labour and assuage households’ fears of a labour market slowdown.

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Starmer has no coherent social mobility plan, says top government adviser

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Christmas burnout: why stressed parents find it ‘harder to be emotionally honest with children’

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Labour admits 60% of parents wrongly targeted in HMRC child benefit fraud crackdown

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‘We’ve got more in common than what divides us’: a Muslim-Jewish kitchen in Nottingham counters hate and hunger

As antisemitism and Islamophobia rise, a community centre brings people together over shared meals, offering an antidote to food poverty, social isolation and divisionDonate to the Guardian Charity Appeal 2025 hereCommunities are our defence against hatred. Now, more than ever, we must invest in hopeIt’s 2.30pm on a Wednesday afternoon and the Himmah Hub, a community centre in Nottingham, is abuzz with activity. Crates of leftover supermarket food are being carried inside, trestle tables assembled, and volunteers are arriving to prepare meals that will be served in a few hours’ time to anyone who needs one – a queue has already begun to form outside.This is the Salaam Shalom kitchen, known as SaSh, a joint Muslim-Jewish project set up in 2015, and based on one of the core tenets of both faith groups: bringing people together through food

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NHS to trial potentially life-saving treatment for deadly liver disease

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Pressure grows on DWP over ‘misleading’ response to carer’s allowance scandal

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