The economy is growing – but it isn’t the end of squeezed household finances

At the start of 2025, the UK economy grew at the fastest pace for more than a year.

According to the Office for National Statistics (ONS), GDP rose by 0.7 per cent between January and March – the fastest rate in the G7.

This rebound was powered by a solid performance in both the services and manufacturing sectors, alongside robust consumer spending.

It marks a clear improvement from the end of 2024, when the economy barely expanded (just 0.1 per cent growth in Q4) and showed no growth at all in January.

Now, let’s be clear, economic growth is a welcome sign. For households, it can mean more job opportunities, potentially rising wages, and – if the trend continues – the prospect of lower interest rates ahead.

But we mustn't mistake one good news story for a full recovery. Beneath the headline numbers, many households are still feeling the pinch.

The data shows real household disposable income – a key indicator of everyday living standards – fell by 1 per cent in the first quarter of 2025.

In other words, despite the broader economic bounce, people’s money isn’t stretching as far as it used to.

Taking a step back, the picture is pretty gloomy. Over the last four years, prices have risen by 25 per cent.

Inflation may have fallen from the painful double-digit levels seen at the height of the cost-of-living crisis, but it’s still significantly above the Bank of England’s 2 per cent target.

Higher interest rates have pushed up the cost of mortgages, and our bills remain vastly higher than they were before the crisis hit.

In April alone, the impact of rising bills left a typical British household more than £450 worse off, according to research by my company Nous.co.

With all this in the background, it’s crucial that households aren’t overspending on the essentials.

The reality? Most of us are.

Nine out of ten British households pay more than they need to on their bills, often by many hundreds of pounds a year.

Why? Because the system is stacked against us.

Suppliers make it difficult to know if you’re paying a fair price. They know the effort involved in shopping around and switching is a barrier for most consumers.

It’s confusing and boring, so most of us just don’t bother.

We regularly save our Nous customers hundreds of pounds that they didn’t know they were wasting.

With the everyday reality still so challenging for UK households, taking steps to ensure we’re not overpaying has never been more important.

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Greg Marsh is the founder and CEO of money-saving tool Nous.co, and a household finance expert.

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