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Household saving ratio at 12% in Q4 shows "the consumer is at maximum uncertainty"

ended 28. March 2025

The household saving ratio is estimated to have grown to 12.0% in the fourth quarter, up from 10.3% in Quarter 3 (July to Sept) 2024, the ONS revealed today. During Quarter 4 2024, non-pension saving contributed 7.3 percentage points to the saving ratio, with pension saving contributing 4.7 percentage points. In the previous quarter, non-pension saving contributed 5.8 percentage points and pension saving contributed 4.5 percentage points to the saving ratio. Excluding the period affected by the coronavirus (COVID-19) pandemic, the household saving ratio stood at its highest point since Quarter 1 (Jan to Mar) 2010. Moreover, non-pension savings contribution to the saving ratio is at its highest level on record, outside of the period affected by the coronavirus pandemic. Newspage asked financial services experts for their views, below.

7 responses from the Newspage community

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Anita Wright
Chartered Financial Planner at Ribble Wealth Management
While the household saving ratio rose in Q4 2024, the headline figure is somewhat misleading when we consider the broader context as it masks a widening disparity in financial resilience across the population. For those in auto-enrolment pension schemes, pay increases and the higher minimum wage have led to larger pension contributions, mechanically boosting the saving ratio. The prospect of future tax rises can trigger a behavioural response, prompting precautionary saving among some households. However, the rise in the saving ratio masks the financial strain faced by a significant portion of the population. Not everyone is in a position to save more—particularly those already struggling with debt. Between November 2024 and January 2025, individual insolvencies in England and Wales rose 8% to 29,782—324 per day. Coupled with a 6.4% rise in consumer credit and a 4.2% increase in credit card debt (BoE), this hihlights that saving is still out of reach for many households.
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Wes Wilkes
CEO at IronMarket Wealth
With levels of savings now at the highest level since the Global Financial Crisis, the consumer is at maximum uncertainty. This will inevitably mean a slowdown in consumer spending and a significant dent in this government's growth ambitions. It also further heightens the chances of a rate cut at the next MPC meeting.
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Colin Low
Managing Director at Kingsfleet
This is clear evidence that ‘the cost of living crisis’ is over, at least for now. The rampant inflation of 2022 and 2023 meant that households used their savings to make up for the shortfall in income due to the rapid increase in prices. However, for many, the last 18 months or so has been the complete reverse. Both benefits and earnings increased above the rate of inflation and households have often had a surplus. The good news is that they are using this in preparing for the likely storm ahead by building up cash reserves.
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Riz Malik
Independent Financial Adviser at R3 Wealth
People are scared and there is still a huge cloud of uncertainty across the UK. Until the feel good factor returns, people, like squirrels, will hoard their nuts. The economy needs people to spend their money to get things moving which puts us in a stalemate position.
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Tony Redondo
Founder at Cosmos Currency Exchange
The increase in the household saving ratio reflects a notable shift in financial behavior. It’s interesting to see this climb further from the third quarter, especially with non-pension savings jumping more than pension savings. That non-pension savings are hitting a record high (outside the COVID-19 anomaly) suggests people are prioritizing liquidity or short-term security over locking funds into pensions. Excluding the pandemic period, this being the highest ratio since Q1 2010 points to the lingering economic uncertainty, higher interest rates incentivizing cash savings, and a reaction to current global instability.
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Rob Mansfield
Independent Financial Advisor at Rootes Wealth Management
It is a positive sign that people are building a nest egg and saving money for their future. In the short term It can help you through an emergency like your car breaking down or your boiler packing up. Over the longer term, it can be the difference between struggling and having a comfortable retirement.
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Harry Mills
Director at Oku Markets
The fact that people can save more is good news about disposable income levels. However, it reflects weakening consumer confidence as saving is prioritised over spending. When consumers, driven by fear, stop spending in favour of saving, the economy slows down in a well-telegraphed and glaringly obvious self-fulfilling prophesy. I imagine unaffordable housing is part of the problem, as renters need to save large portions of their spare cash to scrape together a deposit, especially in London. The capital's housing affordability ratio is above 12 in 80% of its local authorities, compared with an England-and-Wales figure of 7.7. That figure represents the multiple of the median salary to the median house price.