Reeves’ fearmongering has scared Brits into saving. The consequences will be more frightening than Reeves’ ‘black hole’, writes Paul Ormerod

A very bad piece of news for the Chancellor, Rachel Reeves, slipped out last week with relatively little comment.

The personal savings ratio – the proportion of incomes, net of borrowing, which individuals save – rose sharply. From 10.3 per cent in the third quarter of last year, it went up to 12 per cent in the final three months of the year.

Obviously, if people save more, they spend less.

In the final quarter of 2023, savings were only 8.1 per cent of personal income. Consumer spending is just over £1,700bn a year in the UK. So by the end of 2024, people were choosing to spend £70bn less at an annual rate than a year ago.

These are big chunks of money which are being taken out of action. No wonder the economy is teetering on the brink of recession if........

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