Brits have become POORER in 2025 as Labour’s tax bonanza reduced household incomes despite Starmer’s promises

The impact of Labour’s massive tax bonanza has been laid bare today, with figures showing Britons have become poorer this year.

Official national accounts painted a bleak picture, with growth in the second quarter of the year slightly worse than previously thought.

But households were even worse off; The ONS says there is no improvement in per capita wealth in 2025.

There was previously an increase of 0.2 percent from June to September, but this rate was revised to zero.

RHDI per capita fell 0.9 percent in the first quarter and 0.8 percent in the third quarter, for an overall decline of about 1.7 percent so far this year.

The findings are particularly embarrassing for Keir Starmer because he uses the metric as a way of assessing his promise that ‘working people will have more money in their pockets’.

The ONS said the fall in RDI per head was ‘mainly due to increases in taxes on income and wealth’, with Treasury raids offsetting increases in wages.

Liz McKeown, ONS Director of Economic Statistics, said: ‘Today’s updated figures paint the same picture as our initial estimate; Growth continues to slow in the third quarter.

‘Growth in services was partially offset by declines in production, with a significant decline in car production.

‘Our latest figures show that although the household savings rate has fallen recently, it remains high by historical standards.’

Despite the second quarter revision, the UK remained the fastest growing economy among the G7 group countries, alongside Japan, with growth of 0.9 per cent, followed by the US.

However, activity has been slowing since the beginning of the year, with the Chancellor’s taxes largely to blame. The effects of the last major budget raid have yet to be felt.

Last week, the Bank of England announced that it expected growth to remain stable in the last three months of 2025 by reducing interest rates from 4 percent to 3.75 percent.

Figures from the ONS also showed UK GDP per head showed no growth in the three months to September, ending six consecutive quarters of growth.

The fall in household numbers was due to a £6bn increase in taxes, according to the ONS.

Martin Beck of WPI Strategy said: ‘Although wages and salaries continued to rise in the third quarter (up by £3.5bn in total) this gain was more than offset by a £6bn increase in taxes on income and wealth.

‘The figures highlight the corrosive impact of the long freeze on income tax thresholds. ‘As pay rises push more people into higher tax brackets, fiscal drag is steadily eating away at take-home pay, blunting the benefits of wage growth and putting pressure on living standards.’

Matt Swannell, chief economic advisor at EY Item Club, said: ‘The outlook for the private sector remains weak.

‘Real household income growth is currently slowing sharply, and although the household savings rate decreased in the third quarter, it remains high by historical standards.

“Given that fiscal policy is tightening and the effects of borrowers refinancing cheap fixed-rate mortgages will more than offset cuts in bank rates, another year of slower growth is expected for the UK economy in 2026,” he added.