"UK consumption has suffered a double dip in recent years. Real household consumption collapsed by 12.7% in 2020, staging a partial recovery in 2021 and 2022, only to fall again in 2023 and 2024. These developments have left consumption well below its pre-pandemic trajectory: Cebr estimates that household spending in 2025 would have been £260 billion higher had the pre-pandemic trend continued."
"The second dip was arguably more troubling. After rebounding in 2021 and 2022, real consumption fell again, by 0.3% in 2023 and 0.1% in 2024, as households absorbed a succession of blows: an energy crisis, the sharpest inflationary episode in a generation, and the aggressive monetary tightening that followed. Rather than spending, households saved. The savings ratio averaged 10% of disposable income in 2024 and 2025, well above the five-year pre-pandemic average of 6.5%."
Real household consumption collapsed by 12.7% in 2020, partially recovered in 2021 and 2022, then fell by 0.3% in 2023 and 0.1% in 2024. Lockdowns and Brexit drove the initial shock, while an energy crisis, a sharp inflationary episode, and aggressive monetary tightening contributed to the later declines. Households increased saving, with the savings ratio averaging 10% of disposable income in 2024–25 compared with a 6.5% pre-pandemic average. Estimated shortfalls mean household spending in 2025 was roughly £260 billion below the 2009–19 trend, with forgone discretionary spending concentrated in restaurants, hotels and leisure. Consumption returned to modest growth, up about 0.9% in 2025, but uncertainty remains over a sustained recovery.
Read at London Business News | Londonlovesbusiness.com
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