The Numbers at a Glance
Inflation-adjusted household spending grew by just 0.1% in Q4 2025 (October to December), with annual growth for the full year 2025 coming in at 0.8%. Year-on-year, spending was up 0.4% compared to Q4 2024. The modest gains were driven largely by miscellaneous goods and services and transport, while recreation and culture acted as a drag on overall growth.
In short: consumers are spending, but cautiously.
Why This Matters for PI Insurance
When consumer confidence is subdued and household budgets are under pressure, the ripple effects are felt across the professional services sector - from financial advisers and consultants, to architects, and accountants.
Here's how the current environment connects to PI risk:
1. Heightened client scrutiny When consumers are watching every pound, they are far more likely to scrutinise the advice they receive. If a financial plan underperforms or a project runs over budget, a client feeling financial strain is more likely to seek redress. This increases the potential for professional negligence claims, making robust PI cover more important than ever.
2. Pressure on fees and scope Slow spending growth can push professionals to take on more work for less, or to stretch the scope of their services. Cutting corners - even unintentionally, raises the risk of errors and omissions, the very scenarios PI insurance is designed to protect against.
3. Economic uncertainty amplifies liability With household spending growing at under 1% annually, the broader economic backdrop remains uncertain. In uncertain times, clients may attribute financial losses to professional advice rather than market conditions, leading to disputes that require PI cover to defend.
The Bottom Line
A 0.8% annual rise in household spending signals an economy that is ticking along, but without significant momentum. For professionals providing advice or services to consumers and businesses alike, this environment calls for a careful review of PI insurance limits and coverage terms.
Whether you are a sole trader, partnership, or operate your own limited company, now is a good time to ensure your PI policy reflects the true scope of your work - and the heightened risk landscape that a low-growth, cost-conscious consumer environment can bring.
To find out more, please read the latest release of: Consumer trends, UK: October to December 2025 here.
To take a quote out and learn more about what Trafalgar Risk Management have to offer, please visit our website here.
This blog is for informational purposes only and does not constitute financial or legal advice. Always consult a qualified insurance broker for guidance on your specific PI insurance requirements.
