Households ramped up their savings to their highest in almost a year between April and June, official data showed on Tuesday, in a sign that a darkening economic outlook may be causing consumers to retrench.
The Office for National Statistics said the household saving ratio rose to 7.4 per cent in the second quarter, up from 5.9 percent in the first three months of this year.
The increase came as households' real disposable income rose by 1.2 per cent on the quarter - its fastest pace of growth in two years, and coming after a 1.7 per cent drop in the first quarter.
The official data follow a survey suggesting Britons are suffering the biggest squeeze on their incomes in three decades as soaring inflation and weak wage growth have piled pressure on household finances.
The ONS data, published two weeks later than usual due to a major reworking of the national accounts data, indicated Britons are hanging onto their cash in anticipation of tough times ahead.
The economy has been virtually stagnant for the last year and a darkening global outlook, along with harsh government spending cuts at home, have raised fears the economy could even start contracting again.
Worries about deteriorating prospects for growth prompted the Bank of England to restart its quantitative programme this month with a £75bn cash injection aimed at shoring up the recovery.
City A.M. Reporter