Over one quarter of Britons unable to save

by Gill Montia

Story link: Over one quarter of Britons unable to save

The sad state of the UK savings market has been exposed in the Nationwide Savings Index.

According to the building society, 26% of Britons currently save nothing at all and 60% think they are putting aside less then they need, compared with 56% six months ago.

However, while consumers are more pessimistic about how regularly they save than at any time in the past year, increasing numbers see saving as important.

In addition people are more optimistic about their ability to save in the future than at any time since Nationwide began its Savings Index in June 2008.

The recession has pushed the Importance of Saving monitor up by 11 points, indicating that 60% of consumers now think saving in general is important.

Furthermore, the Future Savings Index shows a 10 point increase in the number of people who expect to save more in six months’ time, equating to 19% of respondents.

The Society’s head of savings, Andy Hutchinson, comments: “Rising unemployment and falling income growth clearly make it difficult to save, while the low level of interest rates may have increased the incentive to prioritise debt reduction over deposit accumulation.”

He adds: “The increase in ISA limits announced in the Budget should help to boost longer term levels of savings, it may not have much impact in the short term since very low interest rates are limiting the extent of the tax benefit.”

Nationwide’s latest index is based on a research completed during April and May 2009 with 1,001 people.