The British economy grew strongly in the first quarter of 2007, official figures confirmed today.
However the saving ratio dropped to its lowest level in nearly half a century.
The Office for National Statistics (ONS) said GDP in the first three months of the year expanded by 0.7 per cent, unrevised from last month's estimate, for an annual rate of 3.0 per cent, marked higher from an initial reading of 2.9 per cent.
But the saving ratio fell to just 2.1 per cent, its lowest reading since the first quarter of 1960 and likely to increase concerns that Britons are spending beyond their means and that a sharp retrenchment in consumer spending could still be on the cards.
The ONS said the main reason for the fall in the ratio was a rise in pension contributions, taxes and interest payments, corresponding with stronger consumption.
The Bank of England has already raised interest rates four times in the last year by a total 100 basis points to 5.5 per cent.
Consumers have also seen sharp rises in household bills and local taxes despite earnings increasing at only a meagre rate.
The figures showed household spending increased by 0.5 per cent in the first three months of this year and by 2.9 per cent on a year ago. That reading was slightly lower than the estimate published last month.