UK disposable incomes squeezed by price rises and tax changes
Summary
In early 2026, UK households saw their disposable income fall by 0.8% due to rising prices and higher taxes. The economy grew by 0.6% in the first quarter, with all main sectors expanding, but household savings slightly decreased as spending power was squeezed.Key Facts
- Disposable income in UK households fell 0.8% from January to March 2026.
- This was caused by higher inflation and increased capital gains tax.
- The economy grew 0.6% in the first quarter, with services growing 0.8%.
- Production and construction also saw small gains of 0.2%.
- Household saving ratio dropped slightly from 9.6% to 8.9%.
- Savings remain higher than before the pandemic despite recent declines.
- Energy prices rising recently may slow growth in the third quarter.
- The Bank of England is expected to keep interest rates steady at 3.75% for the rest of the year.
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