Britons “scarred” by years of high inflation are spending less and saving more, a Bank of England official has said.

Catherine Mann, a member of the Bank of England’s Monetary Policy Committee (MPC), said real terms household spending had flatlined since the pandemic and blamed the “scarring” effects of “high and volatile inflation”.

Speaking at a Resolution Foundation event, Ms Mann said: “Consumers who have experienced difficult economic times become more pessimistic about their personal finances and continue to spend less for many more years, so we have scarring in terms of consumer behaviour.”

The comments suggest a consumer spending led recovery for Britain’s struggling economy is unlikely.

Change in Britain’s spending is closely observed by economists as consumption makes up nearly two thirds of GDP and is a key driver of economic growth.

A reluctance to spend is yet another headache for Rachel Reeves as she prepares for the Budget on Nov 26. The Chancellor is expected to impose £30bn of further tax rises, which could cause a further slowdown in consumer spending and weigh on growth.

The UK’s household saving ratio has risen to nearly 12pc in 2025, up from 5pc in mid-2019.

Ms Mann said: “Households rebuilding savings as a precautionary buffer against emergencies, particularly in light of higher uncertainty and volatility, has become one of the dominant reasons for saving more.”

Inflation rose to a 41-year high of 11.1pc in October 2022 – as Russia’s invasion of Ukraine pushed energy prices higher and food prices climbed.

It has since fallen back to 3.8pc, but Ms Mann, who helps to set interest rates at the Bank, said the UK still faces “persistently high inflation”.

Forecasts from Threadneedle Street expect inflation to peak at 4pc in September, before falling to 2.6pc by the end of 2025.

Ms Mann suggested that interest rates should be held at their current level of 4pc to combat price rises.

She said: “In light of elevated inflation and expectations, maintaining restrictiveness for longer would be appropriate.”

Surveys from the Bank of England showed that households in the UK had changed their consumption behaviour even after inflation had come down.

Figures from the Bank of England Inflation Attitudes survey showed that more than half of consumers said they were cutting back spending and trying to save more, up from 30pc in 2019.

The UK is an outlier compared to other developed economies, with real consumption in the US and the euro area returning to its pre-pandemic trend.

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