UK households only left 1.7% of income unspent in the first quarter of 2017, the lowest savings ratio since records began over fifty years ago, according to the Office for National Statistics (ONS).
In comparison, the savings ratio was 3.3% in the last three months of 2016.
“In Quarter 1 (Jan to Mar) 2017, the households and NPISH saving ratio fell to 1.7% from 3.3% in Quarter 4 (Oct to Dec) 2016. This was the lowest quarterly saving ratio since comparable records began in Quarter 1 1963,” the ONS report said.
The ONS did note in its report that higher tax payments was a significant factor in the drop in savings levels since late 2016.
The ONS also revealed that real household disposable incomes fell by 1.4% from January to March, down from 3.3% in the previous quarter.
“Real households disposable income (RHDI) fell by 1.4% in Quarter 1 2017; this was due to a decrease in gross disposable income of 0.9% and an increase in the deflator of 0.5%.”
The overall British economy expanded by 0.2% in the first quarter of the year, a slowdown from 0.7% growth in the previous quarter.
Darren Morgan, ONS head of GDP, said: “GDP growth for the first three months of 2017 remained unrevised at 0.2%.
“Growth was driven by business services and construction, partially offset by declines in some consumer-focused industries, such as retail sales and accommodation.
“The saving ratio has fallen again this quarter to a new record low, partly as a result of higher tax payments, reducing disposable income.
“Some of the fall could be as a result of the timing of those payments, but the underlying trend is for a continued fall in the saving ratio.”
Frances O’Grady, general secretary of the TUC, was quoted by the BBC as saying: “These figures make for grim reading. People raiding their piggy banks is bad news for working people and the economy.
“But with wages falling as living costs rise, many families are having to run down their savings or rely on credit cards and loans to get through the month. With household debt now at crisis levels, we urgently need to create better paid jobs.”