{"id":32846,"date":"2025-06-30T09:10:21","date_gmt":"2025-06-30T09:10:21","guid":{"rendered":"https:\/\/financialrush.com\/?p=32846"},"modified":"2025-06-30T09:10:21","modified_gmt":"2025-06-30T09:10:21","slug":"uk-disposable-income-falls-at-fastest-rate-since-2023","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=32846","title":{"rendered":"UK disposable income falls at fastest rate since 2023"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=08a1004c-4378-4eb8-9b2f-87ca63b3873f\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>UK household disposable income fell at its fastest rate since 2023 in the first quarter while the proportion that people save declined for the first time in two years, potentially knocking one of Labour\u2019s key economic targets off course.<\/p>\n<p>The Office for National Statistics confirmed on Monday that the <a href=\"https:\/\/www.ft.com\/uk-economy\" data-trackable=\"link\">UK economy<\/a> grew at a brisk rate of 0.7 per cent in the first quarter, the fastest since the same period in 2024.<\/p>\n<p>However, the detailed figures showed that rising wages were offset by a rise in taxes and a jump in inflation.<\/p>\n<p>Real household disposable income per head \u2014 the inflation-adjusted amount of income available for a household after taxes and subsidies \u2014 decreased by 1 per cent in the first quarter from a 1.8 per cent expansion in the previous three months, marking the fastest decline since the first quarter of 2023.<\/p>\n<figure class=\"n-content-image n-content-image--full\" data-component=\"image-set\"><picture><source media=\"(min-width: 700px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Ad2428e24-35e4-46a8-b8b1-cbf7e69711b5?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Ad2428e24-35e4-46a8-b8b1-cbf7e69711b5?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Ad2428e24-35e4-46a8-b8b1-cbf7e69711b5?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=3 3x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Ad2428e24-35e4-46a8-b8b1-cbf7e69711b5?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=4 4x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Ad2428e24-35e4-46a8-b8b1-cbf7e69711b5?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=5 5x\" width=\"3500\" height=\"2500\"\/><source media=\"(max-width: 490px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A972add33-d5b1-4dfb-8f0e-5b3e513e080f?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A972add33-d5b1-4dfb-8f0e-5b3e513e080f?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A972add33-d5b1-4dfb-8f0e-5b3e513e080f?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=3 3x\" width=\"1500\" height=\"2000\"\/><\/picture><\/figure>\n<p>Last year, Prime Minister Sir Keir Starmer <a href=\"https:\/\/www.ft.com\/content\/df8f78a5-940a-4f19-970b-89bf79d33f79\" data-trackable=\"link\">said<\/a> the government would target household disposable income as a \u201cmilestone\u201d for rating the success of his economic policies.<\/p>\n<p>Matt Swannell, chief economic adviser to the EY ITEM Club, said that with earnings growth slowing and inflation set to rise, growth in real income \u201clooks set to slow across the rest of this year\u201d. <\/p>\n<p>However, he noted that with households saving a little less, \u201cthere is space for consumption to be cushioned from this slowdown\u201d.<\/p>\n<p>The proportion of disposable income that households save, the household saving ratio, decreased to 10.9 per cent in the first three months, down from 12 per cent in the previous three-month period, marking the first decline in two years.<\/p>\n<figure class=\"n-content-image n-content-image--full\" data-component=\"image-set\"><picture><source media=\"(min-width: 700px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abda846ce-2533-46fe-9b94-58887c82e337?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abda846ce-2533-46fe-9b94-58887c82e337?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abda846ce-2533-46fe-9b94-58887c82e337?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=3 3x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abda846ce-2533-46fe-9b94-58887c82e337?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=4 4x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abda846ce-2533-46fe-9b94-58887c82e337?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=5 5x\" width=\"3500\" height=\"2500\"\/><source media=\"(max-width: 490px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A30c5236c-a005-4de4-8eb6-babb0c85bbff?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A30c5236c-a005-4de4-8eb6-babb0c85bbff?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A30c5236c-a005-4de4-8eb6-babb0c85bbff?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=3 3x\" width=\"1500\" height=\"2000\"\/><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F21726ef0-558e-11f0-a877-59214295948f-standard.png?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=1\" alt=\"Line chart of % showing UK household saving ratio fell, but remains historically elevated\" data-image-type=\"graphic\" width=\"3500\" height=\"2500\" loading=\"lazy\"\/><\/picture><\/figure>\n<p>Liz McKeown, ONS director of economic statistics, said: \u201cThe saving ratio fell for the first time in two years this quarter, as rising costs for items such as fuel, rent and restaurant meals contributed to higher spending.\u201d<\/p>\n<p>She pointed out that the ratio remains \u201crelatively strong\u201d, as it compares with an average of 5.5 per cent in the three years to 2019. <\/p>\n<p>Sandra Horsfield, economist at Investec, said: \u201cThere would seem to be scope for further declines in future as lower interest rates, over time, encourage households to save less. This can act as a support to economic activity.\u201d<\/p>\n<p>The composition of growth in the UK has left the economy \u201clooking a bit healthier\u201d, according to Ruth Gregory, deputy chief economist at consultancy Capital Economics, as the expansion was less dependent on business investment and net trade, and more on household consumption.<\/p>\n<p>Nevertheless, growth in the first three months was propelled by business activity being brought forward ahead of US tariffs, and by a one-off leap in spending on aircraft. \u201cThese sources of growth won\u2019t be sustained,\u201d Gregory said.<\/p>\n<p>Separate monthly figures published earlier in June showed that the economy contracted by 0.3 per cent between March and April. Economists polled by Reuters forecast economic growth to slow to only 0.1 per cent in the second quarter.\u00a0<\/p>\n<p>Weakening real income growth, tightened fiscal policy, high global trade market volatility weigh on the UK economic outlook, said Swannell.<\/p>\n<p>\u201cAfter the strong start to 2025, the UK looks set for another year of weak growth, with headwinds continuing to intensify,\u201d he said. <\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/08a1004c-4378-4eb8-9b2f-87ca63b3873f\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":6,"featured_media":32847,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-32846","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32846","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32846"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32846\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/32847"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32846"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32846"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}