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The economy might have been growing at a decent rate – at least until the war in Iran began – but households feel poorer which bodes badly for future consumer spending, new statistics reveal.

On Thursday, official figures showed the UK economy grew at 0.6 per cent in the first three months of this year.

But the fear is that political infighting in Westminster is affecting not just bond markets but consumer confidence.

St James’s Place annual Financial Health report finds that average UK household wealth fell 17.5 per cent to £104,329 in 2026, down from £126,482.

London has the highest household wealth at £171,455, Yorkshire and the Humber the lowest at £73,488.

Alexandra Loydon, group advice director at St. James’s Place, said: “Many households are feeling worse off, with living costs and heightened global uncertainty weighing on confidence and, understandably, affecting how people feel about their finances and the future.”

That suggests the latest economic figures could be a high point, with consumers cutting spending from here.

Household wealth includes savings, investments and physical possessions – everything apart from property and pensions.

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Paul Donovan, chief economist at UBS, said: “UK first quarter GDP was stronger than expected, led by the consumer. As elsewhere, consumers have reduced savings rates to afford higher oil prices.”

The survey shows that more than twice as many people say their financial situation has worsened than improved in the last twelve months (34 per cent vs 17 per cent).

Everyday financial confidence is also slipping. Just 37 per cent now describe themselves as financially comfortable, down from 42 per cent last year, while one in five (21 per cent) say they are struggling financially, up from 16 per cent.

Joe Nellis, economic adviser to accountants MHA, says: “A near 18 per cent decline in average household wealth over a single year is a major warning sign for the UK economy. Behind the numbers lies a growing sense of insecurity as rising food prices, higher bills, weak wage growth, and global instability continue to erode living standards.

“More than twice as many people say their finances have deteriorated over the past year as have improved. That is not the mood of a confident economy.”

Higher costs of living is the main reason for the negative report, with higher taxes, rent and food bills all part of the somewhat gloomy picture.

Ian Futcher, financial planner at Quilter, said: “There is a growing divide between those who are actively making decisions about their money and those who are drifting. Given the current tax environment that has become much less forgiving. Frozen thresholds mean people can gradually creep into paying more tax, or lose valuable allowances, without feeling any better off in their day-to-day lives.

“Making proper use of pension contributions and salary sacrifice can help mitigate some of that pressure, particularly for those moving close to key tax thresholds but this needs to be planned for.”

Ms Loydon adds: “At a time when so much feels outside of our control, it becomes even more important to focus on the things we can influence. Having a clear plan for your money, and taking small, consistent steps to manage it, can make a meaningful difference – helping people feel more in control and better prepared for whatever comes next.”