London, England – Official data released by the UK’s Office for National Statistics on Monday showed a significant slowdown in the pace of British economic growth. This comes amid increasing pressure on households due to tax increases and eroding savings.
Modest growth and negative adjustments
The UK’s GDP grew by a meager 0.1% between July and September 2024, in line with initial estimates and analysts’ forecasts. The Office for National Statistics also revised its estimate for second-quarter (April-June) growth down to 0.2% from the previously reported 0.3%. This suggests a more pronounced loss of economic momentum than previously thought.
Savings at their lowest level since last year
The data revealed a 0.7% decline in the household savings rate to 9.5%, its lowest level in over a year. The office attributed this decline to two main factors affecting “real disposable income”:
Persistent inflation: which reduced purchasing power.
Tax increases: announced by Finance Minister Rachel Reeves, which outweighed wage growth rates in their impact.
Budget uncertainty deepens the slowdown
Although Britain was among the fastest-growing economies in the G7 during the first half of 2025, this landscape has changed dramatically. Experts believe that the “fiscal uncertainty” preceding Reeves’ second budget (announced on November 26) contributed to curbing investment and growth.
A paradox in consumption: Despite tax pressures, household consumption rose by 0.3% compared to the second quarter. This was the fastest quarterly increase in a year, which analysts interpret as consumers drawing on their savings to maintain their living standards.
Grim outlook for the end of the year
The Bank of England paints a more pessimistic picture for the remainder of the year, forecasting last week zero growth (0%) in GDP for the final quarter (October-December). This forecast presents the British government with the challenge of reviving the economy without triggering a new wave of inflation or increasing the tax burden.
Summary of the situation
British consumers are facing a double whammy of high taxes and dwindling savings, while the economic boom the country experienced at the start of the year appears to have faded under the weight of government fiscal adjustments.
