Consumers are saving less each month as low interest rate returns on cash fail to offer an incentive.
Low returns on cash savings accounts are not attractive Photo: REX FEATURES
Savers are depositing on average £13 less a month than they were this time last year – while nearly a quarter of us do not manage to save anything at all.
Consumers managed to save £87 each month on average this spring, down from £100 monthly a year ago and £95 every month over the winter, National Savings & Investment's (NS&I's) quarterly savings survey found.
Nearly a quarter (23pc) of Britons saved nothing at all during spring 2012, an increase from 17pc of those surveyed in spring 2011 – the equivalent of an increase of nearly three million people saving nothing if the figures were projected nationwide.
As a percentage of income, the drop in monthly savings was from 8.3pc a year ago to just 7pc in spring 2012, NS&I said.
A quarter of people said they are less likely to save their cash over the next three months and nearly half (49pc) said the amount they are able to set aside is unlikely to change over the same period.
The findings come despite signs that the pressure placed on households from the high cost of basics has been easing slightly, with recent falls in inflation.
A study by Legal & General last month suggested that savers are putting away less after becoming fed up with the lack of accounts giving them real returns on their cash, following three years of record low interest rates.
While two in five households told the Legal & General study they could afford to save, only one in five told the study they intend to add to their savings over the coming month.
Accountancy network UHY Hacker and Young recently estimated that savers are losing nearly £18 billion a year and urged people to shop around to get the best rates.
John Prout, retail customer director of 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."
Researchers found that people in the 35 to 44-year-old age group, which often includes those with children to support, particularly struggled to save over the spring.
People in this age group saved 5.8pc of their income this spring compared with 7.6pc in winter, while more than a quarter (28pc) said they did not make any savings at all.
The most recent survey questioned 2,444 people aged 16 and over during May.
Yesterday 09:08 PM
are there "think tanks" proposing to tax pensioners on what they have saved if they have managed to?
are the pensioners and other savers suffering through saving with almost 0% interest whilst others are receiving dividends and bonuses on their monies?
are savings safe in our banks - people need assurances captain2stroke
Yesterday 08:33 PM
Spend your money on drink, motorcycles, sex, drugs and rock'n'roll.
If you don't, then when you are old, all the money you have saved will be taken from you and given to the companies who provide underpaid and over-worked people to come and wipe your bum.
Spend it - otherwise Her Majesty's Bastard ----ing Thieving Scumbag Government will find SOME way of stealing it from you. whitevanman
Yesterday 06:35 PM
Hahahahahahaha...why on earth would anyone save in a Bank or Building society? They have no money and cant be trusted with mine so why on earth should i give it to them..? For a paltry return? No thanks. Best to save it at home or better still,swap it for tangible goods before the BoE makes your pictures of the Queen worth less due to inflation and QE..the silent thieves.. flirtygerty
Yesterday 06:09 PM
How about not swallowing the PR guff from NS&I and saying instead what is undoubtedly true (I am sure you could Google a few stats) -
a) People are paying off debt instead of saving because saving when you have debt is financial lunacy.
b)People have far less disposable income because most basic commodities have risen in price and wages/pensions haven't.
c) There is no good reason to save - if you have available credit at a decent price that can be your rainy day fund. Long-term saving is an activity only available to those with no debt and with available funds - a very small segment of the population. poultryhouse
Yesterday 01:38 PM
With barely controlled inflation the saver is guaranteed to get back less than his original investment. So what's the point in saving a penny? rbater
Yesterday 04:17 PM
Yup, you've said it. As a retiree, saving rates are important to me. So with things as they are, the money steadily shrinks in purchasing power.
Invest in the stock market? I used to, but these days who can we trust and who will take most of the earnings in grossly inflated remuneration? dunroamin
Yesterday 12:35 PM
If you manage to save anything they will hunt you down and take it, one way or another, and maybe put you in prison as well. This government has declared war on its own people. They don't want you to have a financial cushion. They want you to be completely helpless and dependent on the state, like a good serf. Richard Davies
Yesterday 10:10 AM
This is the way it's meant to work - interest rates are low to encourage us to SPEND... if there's something you want, you should buy it now, because inflation is greater than interest... you'd think a 'personal finance' writer would know that? joy_wilts
Yesterday 11:17 PM
We used to "save" ie cash in deposit accounts and ISAs but have now found it more worth while to stockpile goods on special offer. The wardrobe in the spare room is stuffed with packets of Persil at half price. 20 boxes at £6.00 instead of £13 = saving of £140! Anything which we use regularly which is at a bargain price is bought in bulk. Although the layout might be higher the ultimate savings are huge. We have enough cat food to last six months at a good price £3.40 for a box of 12 pouches, further discount for bulk buy, shop price about £5.28.
When I retired 5 years ago I put my pension lump sum into a 10 year Bond at 6.8% - my husband said I was mad - he has changed his tune now though. I know that several colleagues blew most of theirs on luxury holidays and now wish they hadn't.
Saving money at present just makes me feel used because of the low interest rates. By bulk buying I am using them for a change.
Real estate is the UK is a well contested commodity. Tiny island with too many people. Stocks might work out, or leave you broke and vulnerable at old age. Bonds and debentures are safer.
The problem is, no one will gain anything by saving. Today, if you save enough money for a month, 10 years down the line, that money saved, plus interests, will feed you just one meal. They want people to keep spending, so that production does not cease and people are kept employed. People have a tendency to save for a rainy day, but excessive savings brings recession; so the government lowers interests rates to take away the incentive to save. People still save, and in such cases, the government prints out money, thus inflating the currency.
Modern economics works just like a massive global duping agency.
Catch 22. If the people save then the economy burns but if they don't save and spend then their future cash flows are at risk... They just have to live at the moment and buy lottery tickets for their future...
The modern theories of economics are not only imbecilic, but sinister to the hilt.
I have no idea how concepts such as 'debt is money,' 'must inflate currency,' 'must encourage spending,' 'must create demand,' and an eclectic mix of assorted drivel ended up being taught in business schools. Some of the things taught, and practiced in real life are not only mind numbingly dumb, but also fatal to the point that is can cause protests, riots, or even war, even when the flow of tangible goods and services remains more or less the same.
I wonder why a small coterie of fraudsters should be allowed to go scott free with their theories, that are causing so much harm to the hard working people of this world.
Most of the Asian countries import of a lot of items involving advanced technologies, that only the West can supply. Such items are very expensive. There is a lot of budget, and trade deficit in many Asian economies. Only countries that have lot of resources and less people, can benefit either way.
ie. if the people have the option to save (not spend). But with 0$ interest rates on deposits people in UK may have no other option but to spend and when they spend it'll always be the commodities producers, mostly from Asia (China), that will benefit.
... and the importers. The commoners will go hungry, of course. Then, the country will go borrowing beyond its means - and then there is invading other countries, which yields two benefits (1) access to resources, and (2) prospect of weapons sales.