Britons tapping into savings as living costs rise

Britons are being forced to tap into their savings as they struggle to meet the rising cost of living. The level of savings people have set aside fell by an average of 14 per cent during the three months to the end of September, the equivalent of a £279 reduction to £1,771, according to savings provider ING Direct.

The group said the amount people had in deposit accounts was now at its lowest level since it began collecting the data in January 2009, while a quarter of people do not have any savings at all.

It blamed the situation on a combination of rising prices and static incomes, which has left people with less money to save.

At the same time, many consumers are focusing on paying down debt ahead of public spending cuts.

Around 38 per cent of Britons tapped into their savings to pay household bills during the third quarter, while 31 per cent used money they had set aside to cover the cost of a holiday and 11 per cent used savings to pay for expenses associated with the start of the new school year.

The gro

up warned that rebuilding the savings people had spent during the third quarter was likely to be slow, with 35 per cent of people saying they expected to set aside less as a result of the measures announced by the Government in the Comprehensive Spending Review, with just 11 per cent expecting to save more.

People are also feeling less confident generally, with people's confidence in both their income and their spending power falling by five per cent during the quarter, after rising during most of the past two years.