UK households were spending more than they’re saving for three successive quarters for the first time since the financial crisis.
According to data published today (8 October) by the Office for National Statistics (ONS), the cash-basis household saving ratio was negative 0.6 per cent in the second quarter of 2018, which represents an increase compared with the previous two quarters – 0.8 and in March and 1 per cent in December.
A negative cash-basis saving ratio indicates households' spending continued to exceed their gross disposable income in the quarter.
This is the first time the UK has seen this three-quarter trend since Q3 2007 to Q1 2008, the beginning of the UK financial crisis.
This comes as unsecured debt – credit cards and other short-term loans – has hit a record high of £214bn, according to the Bank of England.
According to estimates of pension provider Aviva, the UK’s unsecured debt equates to average of £7,800 a household.
Alistair McQueen, head of savings and retirement at Aviva, said the UK had "fallen out of love with saving, again".
He said: "For this first time in more than a decade, we have been spending more cash than saving for three quarters in a row. The last time this happened we were in the midst of the great financial crisis of 2007 and 2008.
"Money is tight. Incomes continue to flat-line, debts continue to rise, and interest rates are starting to creep up. Many households are struggling to keep their heads above their financial waters.
"For many it is wise to save for a rainy day. It may not be raining yet, but there are clouds gathering."
Kate Smith, head of pensions at Aegon, said the figures "paint a poor picture of the UK’s economic wellbeing overall".
Despite UK economy growth increasing to 0.6 per cent in the three months to the end of July, "consumers continue to feel the pinch on their purse strings," she said.
Ms Smith added: "Many households may feel that they are just getting by and today’s figure reveal that not only has real household disposable income per head fallen, but many households’ spending is exceeding their gross disposable income.
"Given ongoing Brexit negotiations and uncertainty around interest rate hikes, consumers are wise to monitor their personal finances closely and avoid burying their heads in the sand. Setting aside as much as possible now will help to build financial security for now and in the future."