Britons stash away the cash in the downturn

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SAVINGS levels in Britain are at their highest level for nearly a decade, according to new quarterly research.

Britons are now saving 8.09 per cent of their income each month, £104 in real terms, a rise from 7.33 per cent or £90 in the previous quarter and from 7.66 per cent or £95 in the same period last year.

This represents a rise in savings for the third quarter in a row, the survey by Treasury-backed savings body NS&I showed.

It is the first time since spring 2011 that the average amount Britons are saving each month has broken the £100 barrier, and is the highest amount recorded since the quarterly savings survey began in winter 2004.

The findings come despite the continued squeeze on people’s budgets from high living costs and stagnant wages, as well as the poor savings returns on offer generally following four years of the bank rate being held at a record 0.5 per cent low.

The research also showed that the amount of Britons not making any savings each month has decreased with now one fifth of Britons putting nothing aside, compared to 25 per cent in the previous quarter.

NS&I’s findings suggest that all age groups have improved their savings levels (apart from those aged between 35-44) but it is the younger generations, in particular, that are driving the savings trend upwards.

Those in the 25-34 age group are now saving 9.29 per cent of their incomes each month, £125 in real terms – well above the national average of £104 and the highest figure recorded since winter 2010.

More than 40 per cent of savers aged between 25-34 are using savings goals to help them save, with of these 59 per cent of saving for a home, a mortgage, or for home improvements.

John Prout, NS&I retail customer director, said: “It is really good to see the average amount saved per month has risen over £100, especially as the cost of Christmas can often be felt for some time after.

“The research suggests that most age groups in Britain are saving more and this corresponds with an increased use of savings goals from last summer, which can only be an encouraging sign for the future.”

Just over a quarter of Britain’s savers – or 28 per cent – set specific savings goals, and the evidence shows that Britons with such focus are saving an extra £39 each month, equating to £150.12 a month, compared to £111.09 saved by those saving for no specific reason.

The main drivers for the desire to save in recent years has been to join the property market, get away on holiday or save for a special occasion, or save in case of emergency and this quarter findings prove no different.

Thirty eight per cent of Britons with a savings goal stated that they were looking to save for a deposit to buy a house, pay off a mortgage or for home improve- ments.

Meanwhile, 38 per cent admitted they were saving for a holiday or special occasion, with women the most keen to save for this reason, while 26 per cent stated that they were saving in case of an emergency.

Mr Prout continued: “Setting savings goals can help savers gradually build their pot to save for particular long-term targets and our research suggests that setting a goal enables savers to save an extra £39 each month.”

Londoners were found to be saving the most across the country, at an average of almost 10 per cent of their incomes or £142 each month. The survey was conducted among 2,461 people.