The UK economy may have shown unexpected growth in the first quarter, but households are feeling significantly poorer, raising concerns about future consumer spending, according to new data.
Household Wealth Plunges
The St. James’s Place annual Financial Health report reveals that average UK household wealth fell by 17.5% to £104,329 in 2026, down from £126,482 in the previous year. This measure includes savings, investments, and physical possessions, excluding property and pensions.
Regional disparities are stark: London boasts the highest average household wealth at £171,455, while Yorkshire and the Humber have the lowest at £73,488.
Consumer Confidence Slips
Everyday financial confidence is also declining. Only 37% of people now describe themselves as financially comfortable, compared to 42% last year. Meanwhile, one in five (21%) say they are struggling financially, up from 16%.
Paul Donovan, chief economist at UBS, noted: “UK first quarter GDP was stronger than expected, led by the consumer. As elsewhere, consumers have reduced savings rates to afford higher oil prices.”
Rising Costs Bite
The primary drivers of the negative report are higher living costs, including increased taxes, rent, and food bills. More than twice as many people report that their financial situation has worsened rather than improved over the past year (34% vs 17%).
Joe Nellis, economic adviser to accountants MHA, warned: “A near 18% decline in average household wealth over a single year is a major warning sign for the UK economy. Behind the numbers lies a growing sense of insecurity as rising food prices, higher bills, weak wage growth, and global instability continue to erode living standards.”
Expert Advice
Ian Futcher, financial planner at Quilter, highlighted the growing divide: “There is a growing divide between those who are actively making decisions about their money and those who are drifting. Given the current tax environment that has become much less forgiving, frozen thresholds mean people can gradually creep into paying more tax or lose valuable allowances without feeling any better off.”
Alexandra Loydon, group advice director at St. James’s Place, added: “At a time when so much feels outside of our control, it becomes even more important to focus on the things we can influence. Having a clear plan for your money, and taking small, consistent steps to manage it, can make a meaningful difference.”
The latest economic figures may represent a high point, with consumers expected to cut back on spending amid growing uncertainty.
