Austerity and low interest rates mean Brits saving less

Wednesday, 04 July 2012 03:15

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Belt-tightening Brits are saving 13 per cent less than a year ago, new research shows.

According to NS&I’s quarterly savings survey, consumers are putting aside £87 each month, down from £100 last spring.

But 23 per cent of those polled are now saving nothing each month, up from 17 per cent last year – an increase of almost three million people, the study reveals.

The decline in savings is also due to low interest rates. meaning savers struggle to gain a real return after inflation. Inflation was high during 2011, peaking at 5.2 per cent in September 2011 before coming down to its present level of three per cent in May.

Last spring nearly a third of Brits with savings goals were motivated to save for an emergency, but this fell to just 24 per cent during winter. Perhaps as a result of this, more than a third of savers now don’t have enough savings to cope in an emergency.

And the outlook for UK savings levels is not optimistic. A quarter of people polled said they’re less likely to save over the next three months, while almost half said the amount they are able to set aside will not change over the same period.

John Prout, retail customer director at NS&I, said: “When times are tough it can be difficult to save but even putting away a few pounds each week will help act as a financial cushion, should you face an emergency.

“It is worth everyone taking another look at their finances to make sure their money goes as far as possible. Why not start a log of all incomings and outgoings to help you work out a budget? This can be a useful way to keep on top of your money management.”

The research shows that people aged 35 to 44 particularly struggled to save this quarter, typically putting aside 5.82 per cent of their income this spring compared with 7.58 per cent in winter.

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