UK households will come under more financial pressure tomorrow, when Britain’s energy price cap rises.

The limit on how much providers can charge for electricity and gas will go up by 13% on 1 July, to the equivalent of £1,862 a year for a typical bill.

Adam Scorer, chief executive at National Energy Action, says this increase should be a ‘red energy warning’:

’Tomorrow’s price cap rise should be a red energy warning. Energy inefficient homes take lives in winter and will increasingly threaten the most vulnerable in summer; London Ambulance Service had its busiest day on record on Friday.

‘Fuel poverty means many cannot experience a comfortable and safe temperature at home, because the building fabric makes it impossible or the cost of doing so makes it prohibitive. This is a public health emergency for the most vulnerable and needs to be addressed as such.

‘Tomorrow’s cap rise is another blow for millions already struggling. The legacy of the energy crisis is millions of households locked into debt they cannot repay, and that is pushing up bills for everyone. If we fail to act, we risk seeing more households forced onto prepayment and effectively cut off from energy. That cannot be the answer to a problem caused by unaffordable bills.

‘We need urgent action to clear this debt and stop costs being baked into the system. The right response is to scale debt relief. As our new paper, Clearing the Decks, sets out, that means enabling and expanding Ofgem’s Debt Relief Scheme with additional funding so more of this debt can be cleared, reducing harm and lowering costs across bills.’

Today’s data also shows that the UK economy grew less than previously thought in the first calendar year of the Labour government.

The ONS now estimates that UK GDP rose by 1.3% during 2025, down from its previous estimate of 1.4% growth.

As you can see on this chart, the ONS lowered its estimate for growth in the second half of 2025, while also nudging it up a little for the second quarter of last year.

The UK’s growth of 0.6% in January-March outpaces the rest of the G7, just!

The US and Japan were close behind, with quarterly growth of 0.5%, while Italy and Germany both grew by 0.3%.

Canada stagnated, while France is on the brink of a technical recession after its GDP fell by 0.1% in Q1 2026.

The fall in UK real household disposable income (RHDI) in the first quarter of 2026 came despite increase in income in these areas:

• compensation of employees, by £8.2bn

• net property income, by £2.1bn

• gross mixed income, by £1.5bn

But….this was offset by an increase in taxes on income and wealth, by £6.9bn, and a fall in net social contributions, by £5.1bn.

The Office for National Statistics says:

The impact of the reduction in the tax-free allowance for capital gains, and the resulting increase in Capital Gains Tax payments, contributed to the increase in taxes on income and wealth.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK living standards fell in the first quarter of the year, even though the economy grew, highlighting the challenge facing Andy Burnham as he pledges to “lift the country’ back up”.

New data from the Office for National Statistics this morning shows that real household disposable income per head shrunk by 0.8% in the first quarter of 2026, showing that people were left with less money to spend after taxes.

The ONS reports that while pay and income from property rose in the quarter, this was more than wiped out by higher taxes on wealth and income, and a fall in ‘net social contributions’.

The households’ saving ratio – which estimates the percentage of disposable income Britons save rather than spend – fell by 0.7 percentage points to 8.9%, driven by a fall in the contribution of non-pension saving. That indicates people had less money to put aside, as rising prices pushed up the cost of living.

In better news, the ONS confirmed that the UK economy grew by 0.6% – that is the fastest growth recorded by any G7 country in January, something for Rachel Reeves to cling onto as Burnham weighs up who to appoint as chancellor should be succeed Sir Keir Starmer as PM soon (as appears likely).

But the fall in disposable income highlights that GDP growth alone is not enough to create a healthy economy that works for everyone.

Director of Economic Statistics Liz McKeown says:

“Our latest set of figures show no revision to economic growth in the first quarter of this year. However, growth for 2025 was revised down a little.

“Services were the main driver of growth in the latest quarter, with strength in computer programming, wholesale and advertising only partially offset by falls in rental companies and recruitment agencies. Production and construction also both grew overall, although construction only partly reversed its recent weakness.

“The household saving ratio continued to ease at the start of 2026 but remains above its pre-pandemic levels.”

The agenda

• 7am BST: ONS releases UK quarterly accounts for Q1 2026

• 7am BST: German retail sales for May

• 8.55am BST: German unemployment report for June

• 2pm BST: US house price index for April