British households saved less between July and September this year as they felt the impact of rising taxes, but still increased their spending, according to official data which confirmed a slowdown in the overall economy.
Gross domestic product rose just 0.1%, the Office for National Statistics reported, in line with its initial estimate and the forecasts of economists seen by Reuters.
Growth in the April-June period was revised down to 0.2% from a previous estimate of 0.3%.
The bureau said the savings rate fell 0.7 percentage points to 9.5%, its lowest level in more than a year, as households’ real disposable income was hit by tax increases that outpaced income growth, as well as inflation.
But household consumption increased by 0.3% compared to the second quarter, when it recorded no growth. This is the fastest quarterly increase in a year.
Finance Minister Rachel Reeves raised taxes in her first budget in 2024, including on some forms of property income, although most of the burden fell on employers rather than individuals.
The UK was the fastest-growing G7 economy in the first half of 2025, along with Japan, but has slowed sharply since then, partly due to months of uncertainty over possible tax increases in Reeves’ second budget, which she announced on November 26.
Last week, the Bank of England said it expects zero GDP growth for the October-December period, but estimates the underlying pace of economic growth to be around 0.2% per quarter.
“The composition of growth in the third quarter was somewhat less dependent on government spending than in the first estimate,” said Alex Kerr, a UK economist at Capital Economics.
However, overall data confirmed the economy is slowing after a strong start to 2025 and the capital expects growth of just 1.0% next year, down from 1.4% this year, Kerr said.
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