UK households prioritise saving more than at any point since 2008 crash, survey finds
Results reflect concerns over tax rises in the autumn and impact of inflation, analysts say
“Anxious” British households are prioritising saving money over spending more than at any point since the global financial crisis, according to a survey that underlines concerns about the lack of a rebound in consumer activity.
Some 34 per cent of consumers deemed July “a good time to save”, up from 27 per cent in June and the highest reading since November 2007, before the 2008-09 financial crash, research company GfK said on Friday.
Neil Bellamy, consumer insights director at GfK, said the jump in the savings index suggested “people are anxious” and that those able to “put money aside are building contingency funds”.
Between 2008 and the end of 2020, the savings index averaged minus 2 per cent but it rose sharply with the cost of living crisis, as Britons grappled with rising prices, rents and mortgage costs.
Wages have been rising faster than prices since mid-2023, helping household finances. But real household disposable income per head — the inflation-adjusted amount of income available for a household after taxes and subsidies — fell 1 per cent in three months to March, owing to the impact of higher taxes and price growth.
With analysts predicting that chancellor Rachel Reeves will have to raise taxes in the autumn Budget to fill a fiscal hole of £20bn or more and inflation rising more than expected in June, “some people may be sensing stormy conditions ahead”, Bellamy added.
GfK’s separate overall consumer confidence index — a measure of how people view their personal finances and broader economic prospects — fell one point to minus 19.
The survey, conducted in the first half of July, is closely monitored as an indication of how much consumers are willing to spend, which accounts for about 60 per cent of UK GDP.
Households’ assessments of the UK economic situation over the past year and over the next 12 months both deteriorated by one point in July.
Official data last month showed that the household saving ratio — the proportion of disposable income put away by households — fell to 10.9 per cent in the first three months of 2025.
The figure was down from 12 per cent in the three months to December 2024, but still well above the 5.5 per cent average in the three years to 2019, before the Covid-19 pandemic and upsurge in inflation.
Historically higher savings contributed to disappointing household spending throughout 2024 and the first three months of this year.
Households put an extra £14bn into ISAs in April, the highest amount since data collection began in 1999, according to the Bank of England. A further £3.9bn went into the tax-free savings products in May.
The surge in deposits came after Reeves was expected to cut the annual tax-free cash Isa allowance in an effort to shift some of the £300bn held in this product into UK companies. But this month she shelved the plans, after a fierce backlash from building societies and consumer champions.
Philip Shaw, economist at the bank Investec, said increased speculation about tax rises in the autumn — following U-turns by the government on cuts to welfare and winter fuel payments — was likely “the biggest driver” behind weakening consumer confidence.
Companies have also been hit by lacklustre spending and rising costs, with the S&P Global purchasing manager survey pointing on Thursday to weakened business sentiment in July as the recovery in the dominant services sector lost momentum.
Bellamy said it was “difficult to see what will lift consumer confidence meaningfully higher in the months to come. It has drifted quietly downwards over the past year, and any fresh challenges or shocks could easily push confidence sharply lower.”