British consumers trimmed their savings in the third quarter of this year as higher taxes squeezed disposable incomes, even as households continued to spend, official figures show.

New data from the Office for National Statistics (ONS) confirmed the economy expanded by just 0.1% between July and September—matching earlier estimates and underscoring a marked slowdown after stronger growth earlier in the year.

The figures also revealed that GDP growth in the second quarter was weaker than previously thought, revised down to 0.2% from 0.3%.

Household savings fell sharply, with the saving ratio slipping 0.7 percentage points to 9.5%—its lowest level in more than a year—as tax increases outweighed income gains and persistent inflation. Despite the pressure on budgets, household consumption rose by 0.3%, the fastest quarterly increase in 12 months, after flatlining in the previous quarter.

The financial squeeze follows tax rises introduced in Finance Minister Rachel Reeves’ first 2024 budget, including measures targeting some forms of wealth income. While much of the tax burden fell on employers, households still felt the impact on disposable income.

Britain had been among the strongest performers in the G7 during the first half of 2025, alongside Japan. But momentum has faded since, dragged down partly by months of uncertainty ahead of Reeves’ second budget, announced on 26 November.

Last week, the Bank of England said it expects flat GDP growth in the final three months of the year, though it believes underlying economic momentum remains around 0.2% per quarter.

“The breakdown in growth in Q3 was a bit less reliant on government spending than in the first estimate,” said Alex Kerr, UK economist at Capital Economics. He added that the data confirmed the economy’s slowdown after its strong start to 2025, with Capital Economics forecasting only 1.0% growth next year—down from 1.4% in 2025.

The ONS reported that GDP in the third quarter was 1.3% higher than a year earlier, unchanged from its initial reading. On a per capita basis, output was 0.9% higher year-on-year.

Britain’s current account deficit narrowed to £12.1 billion in the three months to September—far below the £21.1 billion forecast in a Reuters poll and equivalent to 1.6% of GDP, down from 2.8% in the previous quarter.

ONS revisions also showed stronger-than-expected income flowing into the UK from foreign direct investment abroad, alongside a downward adjustment to earnings in Britain by overseas investors.