Traditionally, people have always been encouraged to “save for a rainy day”, building up a financial reserve which can be used for a wide variety of reasons from covering emergency household goods replacement to paying for a daughter’s marriage. Of course, one can only save money if you have more income than expenditure. This statistic is captured as the savings ratio and is both a barometer of return on savings investment (currently at historically poor levels in most cases) and any shortfalls in household funding due to the cost of living rising.

Over the period between 1955 to date, the average value of the savings ratio has been 8.35% (range from -0.9; 1958, to 15.5%; 1993). In Q4 2016, the savings ratio stood at 3.3% having started the year above the 6% level. In the most recent set of data for Q1 2017, the figure has declined to just 1.7%. This level is a modern record low.

UK GDP also slowed sharply between Q4 2016 and Q1 2017 from 0.7% to 0.2%. In part, the decline was blamed by ONS on falling consumer spending which would be consistent with many people tightening their belts which is reflected in the falling savings ratio. Indeed, disposable income has fallen for three successive quarters which is the first time this has been seen since the 1970s. An additional factor which may have surprised savings in Q1 is the timing of tax payments which could have reduced disposable income in the quarter.

Trade Union Congress general secretary summed up the situation affecting the poorer members of society: "These figures make for grim reading. People raiding their piggy banks is bad news for working people and the economy. But with wages falling as living costs rise, many families are having to run down their savings or rely on credit cards and loans to get through the month. With household debt now at crisis levels, we urgently need to create better-paid jobs."

This data will add further pressure on the government to end a 1% pay rise cap on public sector employees – inflation is currently running at 2.9%.