The UK economy is teetering on the edge of stagnation as households boost savings to record levels outside of the pandemic era.
According to the latest data from the Office for National Statistics (ONS), GDP grew by just 0.1% in the final quarter of 2024, following zero growth between July and September. This sluggish performance reflects growing consumer caution in the face of an uncertain economic outlook.
The household savings ratio rose sharply from 10.3% to 12% in the last three months of the year—the highest level recorded outside of the pandemic since 2010, in the wake of the global financial crisis. Non-pension savings also reached an all-time high, excluding the Covid-19 period.
ONS Chief Economist Grant Fitzner noted that the economy “continues to show little growth since last summer.”
On a per capita basis, GDP fell by 0.1% between October and December, marking two consecutive quarters of decline and placing the measure—often viewed as a key indicator of living standards—into technical recession. Across the full year, GDP per head saw no growth at all.
These figures follow the Office for Budget Responsibility’s (OBR) decision on Wednesday to slash its forecast for UK GDP growth in 2025, cutting its projection in half from 2% to 1%. For 2024, the ONS reported annual GDP growth of 1.1%, slightly above the OBR’s revised estimate of 0.9%.
Chancellor Rachel Reeves responded to the bleak forecasts in her Spring Statement, attributing the subdued outlook to global instability. “The world has changed,” she said, citing geopolitical tensions, unstable trade patterns, and rising borrowing costs as key pressures on the UK economy.
More turbulence may lie ahead, as U.S. President Donald Trump prepares to announce sweeping “reciprocal” tariffs on April 2, a day he has dubbed “Liberation Day” for the U.S. economy. On Wednesday, Trump unveiled a 25% tariff on imported cars, a move that could deliver a significant blow to the UK and European auto sectors.
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