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The Office for National Statistics (ONS) has reported that UK households saved less money in the third quarter of 2025, with the saving ratio falling to 9.5%. Source: theguardian.com.
What Happened
The saving ratio — the percentage of disposable income saved rather than spent — dropped 0.7 percentage points to 9.5%.
This is the lowest level for more than a year, according to the ONS.
Key Facts
- Real household disposable income per capita fell 0.8%.
- Taxes on income and wealth increased, reducing disposable income.
- Quarterly GDP growth slowed to 0.1%, down from 0.2% in the second quarter.
Background: How the Saving Ratio Works
The saving ratio measures how much of a household’s income is saved versus spent.
It is calculated using disposable income — income after taxes — and reflects consumer spending habits.
A drop in the ratio suggests households are spending more or saving less, often due to financial pressure.
Why It Matters
Lower savings rates can signal reduced consumer confidence and weaker demand for goods and services.
When consumers spend less, businesses may face slower sales, leading to reduced investment and hiring.
Economists say this could slow overall economic growth, especially if spending remains subdued.
Contributing Factors
Higher taxes on income and wealth have reduced disposable incomes.
Personal tax thresholds were frozen for a further three years, pushing more workers into higher tax bands.
Business groups have also blamed the £25bn increase in employer national insurance contributions — announced in 2024 — for dampening business activity.
What to Watch Next
The Bank of England cut interest rates, following official data showing inflation fell.
This move was expected after inflation declined, suggesting the worst of inflationary pressures may have passed.
Economist Elliott Jordan-Doak says consumer spending could strengthen in early 2026, once the uncertainty around the upcoming budget ends.
He adds that the government abandoning plans to raise income tax may help ease household concerns about future spending.
Danni Hewson of AJ Bell says the economy still faces significant challenges in delivering sustained growth.
She notes that encouraging spending and business expansion will require more than just a stable financial environment — it will need strong leadership and clear policy actions.
For individuals, this means tighter household budgets and more cautious spending, especially in a period of fiscal uncertainty.
Those looking to manage their finances can explore practical tools, such as student money tips, which offer real-world strategies for saving and budgeting.
Limitations of the Data
The ONS data covers only household-level saving, not individual or regional variations.
It does not capture informal savings, such as those held in informal networks or digital platforms.
Additionally, the data reflects only one quarter, and trends may not be fully visible without longer-term analysis.
