The share of income UK households save was at its lowest in 2017 since records began, as expenditure outstripped inflation-eroded pay over the 12 months.

The Office for National Statistics reported that the full-year household “saving ratio” fell to just 4.9 per cent in the year, down from 7 per cent in 2016 – and the lowest annual reading since 1963.

Total incomes grew by 3.5 per cent, while expenditure was up 3 per cent.

Inflation spiked to above 3 per cent in 2017, mainly due to the slump in the value of sterling in the wake of the June 2016 Brexit vote.

Average real wages began falling in April, although there are indications that pay growth is now rising above the cost of living again.

Lowest on record

There have been concerns from regulators and campaign groups about the extent to which households have been dipping into savings and increasing debt in order to make ends meet.

Separately, the Bank of England reported on Thursday that the annual growth rate of unsecured consumer credit ticked up again to 9.4 per cent in February. Within this, credit card borrowing rose 9.6 per cent.

“Household spending power has been flatlining for the last two years. That has forced consumers to run down savings and borrow more just to sustain sluggish growth in spending,” said Ian Stewart, an economist at Deloitte.

The total household debt-to-income ratio in 2017 stood at 133 per cent in 2017, according to the ONS.

The ratio fell steadily in the wake of the financial crisis, after peaking at 150 per cent in 2007, but has been rising again since 2015.

Overall GDP growth for the final quarter of the year was confirmed by the ONS at 0.4 per cent, unrevised from the agency’s previous estimate and down from the 0.5 per cent rate recorded in the previous quarter.

The quarterly growth rate was lower than the 0.6 per cent recorded in France, Germany and the US, although in line with Canada and Japan and higher than Italy’s 0.3 per cent.

But the ONS also noted that the UK was the only G7 country to see a slowdown in its annual GDP growth rate in 2017, suggesting Britain is benefiting less from the synchronised global economic pick-up than others.

Only G7 slowdown was in UK

Full-year UK GDP growth was 1.8 per cent, the lowest since 2012.

Despite the dip in the savings ratio, real household spending growth is estimated to have slowed sharply from 3.1 per cent in 2016 to 1.7 per cent in 2018.

Business investment recovered moderately from the 0.5 per cent 2016 contraction, the first full-year drop since the last recession, rising by 2.4 per cent.

Net trade made a positive contribution to overall GDP growth, as exports grew faster than imports in 2017, although less than many had hoped given sterling’s depreciation.

“The recent performance of net trade remains worse than all other big depreciations of sterling in the post-war period,” said Samuel Tombs of Pantheon Macroeconomics.

Per capita, UK national income grew by only 1.2 per cent compared with 2016.