British households are saving less than ever before, according to official figures that showed consumers lived beyond their means at the end of last year.

It came as the Office for National Statistics (ONS) said the UK's current account deficit more than halved in the final quarter of last year as the weaker pound boosted exports and pushed up earnings on overseas investments.

While the data suggest net trade will boost growth this year, economists said the big drop in the saving ratio provided "worrying signs" that recent increases in consumer spending were "unsustainable".

Living beyond our means

The ONS confirmed that the UK economy grew by 0.7pc in the final quarter of 2016.

Data showed real household spending rose by £2bn, or 0.7pc over the period, helping to push household spending per head back to pre-crisis levels for the first time.

However, real household disposable income fell by 0.4pc in the final quarter of 2016, as Britons drove down their savings to fund purchases.

This saw the household saving ratio - which measures the amount households have available to save as a share of disposable income - drop to 3.3pc at the end of last year, from 5.3pc in the third quarter.

This is the lowest rate since records began in 1963.