The impact of Labour’s huge tax bonanza was laid bare today as figures showed Brits getting poorer this year.
Official national accounts painted a dismal picture, with growth slightly worse than previously thought in the second quarter of the year.
But the situation for households was even bleaker, with the ONS now saying there has been no improvement in wealth on a per head basis in 2025.
Previously there had been a 0.2 per cent rise in June to September, but that has been revised down to zero.
RHDI per head fell 0.9 per cent in the first quarter and 0.8 per cent in the third quarter, giving a nearly 1.7 per cent drop overall so far this year.
The findings are particularly embarrassing for Keir Starmer as he has trumpeted the metric as a way of judging his promise that ‘working people will have more money in their pocket’.
The ONS said the fall in RHDI per head was ‘driven mainly by an increase in taxes on income and wealth’ – with the Treasury’s raids offsetting rises in wages
The findings are particularly embarrassing for Keir Starmer and Rachel Reeves as they have trumpeted the RHDI metric as a way of judging the promise to put more money in the pockets of ‘working people’
The ONS said the fall in RHDI per head was ‘driven mainly by an increase in taxes on income and wealth’ – with the Treasury’s raids offsetting rises in wages.
ONS Director of Economic Statistics Liz McKeown said: ‘Today’s updated figures paint the same picture as our initial estimate, with growth continuing to slow in the third quarter.
‘Growth in services were partially offset by falls in production, with a marked drop in car manufacturing.
‘Our latest figures show the household saving ratio, whilst falling in recent periods, remains high by historic standards.’
Despite the second quarter revision, the UK remained the joint fastest growing economy in the G7 group of countries, alongside Japan, with growth of 0.9 per cent, followed by the US.
However, activity has been slowing since the beginning of the year, with the Chancellor’s taxes widely blamed. The effects of the latest massive Budget raid have yet to be felt.
The Bank of England said last week it expected growth to flatline in the final three months of 2025, as it cut interest rates from 4 per cent to 3.75 per cent.
Figures from the ONS also showed that GDP per person in the UK showed no growth in the three months to September, ending six quarters of expansion in a row.
The reduction in household was driven by a £6billion increase in taxes, according to the ONS.
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Official national accounts painted a dismal picture, with growth slightly worse than previously thought in the second quarter of the year
Matt Swannell, chief economic adviser to the EY Item Club, said: ‘The outlook for the private sector remains subdued.
‘Real household income growth is now slowing sharply, and although the household saving ratio decreased in the third quarter, it remains high compared to historical standards.’
‘Given that fiscal policy is tightening and the effects of borrowers refinancing cheap fixed-rate mortgages will more than offset cuts to bank rate, another year of sluggish growth for the UK economy is expected in 2026,’ he added.
