THE amount of money families are saving has almost halved in the past year as households "raid" their rainy day funds to keep afloat, according to new figures.
The statistics highlight the real state of the economy, despite recent signs of "green shoots", according to union leaders.
The Tory-Lib Dem Coalition has hailed recent growth figures, which suggest that the UK economy may have turned a corner.
But the TUC warned that it was being artificially propped up by households digging into their piggy banks.
Union leaders claim that it is this use of savings, not an upturn in growth, which is saving the economy from sliding back into recession.
Figures show that the amount of money being saved by families across the country has fallen to its lowest level in four years, from £20.1 billion to £11.4bn, a drop of more than 40% in just a single year.
At the same time consumer spending has increased, by 4.2%, the figures from the Office for National Statistics show.
The union organisation said that its research showed just how "fragile" the UK's economic recovery is.
TUC General Secretary Francis O'Grady urged the Government to do more to help boost household incomes, adding: "This analysis shows that Britain's fragile recovery is being propped up by families raiding their piggy-banks.
"A sustainable recovery needs to be based on growth, investment and a recovery in living standards. That's why Britain needs a pay rise."
A Treasury spokesman said: "The positive news that has been released right across the economy this week shows that the UK is on the mend. But there is a long way to go.
"The Government is determined to take the tough decisions to right what went wrong in the UK economy and deliver jobs and growth."
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