UK household wealth falls as living costs weigh on consumers

UK household wealth fell sharply in 2026 as higher taxes, food prices and rent continued to squeeze consumers, raising questions over the outlook for spending despite stronger-than-expected economic growth.

Official data on May 14 showed the economy expanded by 0.6% in the first quarter of the year, the British online newspaper says.

A report from St James’s Place found average UK household wealth dropped 17.5% to £104,329 in 2026, down from £126,482. London recorded the highest average at £171,455, while Yorkshire and the Humber had the lowest at £73,488.

“The economy might have been growing at a decent rate – at least until the war in Iran began – but households feel poorer which bodes badly for future consumer spending, new statistics reveal.”

Alexandra Loydon, group advice director at St James’s Place, said: “Many households are feeling worse off, with living costs and heightened global uncertainty weighing on confidence, and understandably, affecting how people feel about their finances and the future.”

The survey found more than twice as many people reported their financial situation had worsened than improved over the past year (34% versus 17%), while 37% now describe themselves as financially comfortable, down from 42%.

Joe Nellis, economic adviser to accountants MHA, said the decline signalled mounting pressure on living standards.

“A near 18 per cent 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.

“More than twice as many people say their finances have deteriorated over the past year as have improved. That is not the mood of a confident economy.”

Paul Donovan, chief economist at UBS, said consumer spending had helped support growth.

“UK first quarter GDP was stronger than expected, led by the consumer. As elsewhere, consumers have reduced savings rates to afford higher oil prices.”

Ian Futcher, financial planner at Quilter, said tax pressures were adding strain.

“Making proper use of pension contributions and salary sacrifice can help mitigate some of that pressure, particularly for those moving close to key tax thresholds, but this needs to be planned for.”

He added: “Many households are feeling worse off, with living costs and heightened global uncertainty weighing on confidence and, understandably, affecting how people feel about their finances and the future.”

By Aghakazim Guliyev