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Britons’ saving habit proves short lived

Britons’ saving habit proves short lived

Category: Savings

Updated: 29/12/2009
First Published: 29/12/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Savings levels amongst consumers fell during the third quarter (Q3) of 2009, having reached a high during the previous three months.

Total savings fell to £13 billion during Q3, a contraction of some £6 billion from the £19 billion that was saved by consumers over the three month period between April and June, data from unbiased.co.uk has revealed.

Despite this fall, debt levels only fell marginally, from £5 billion in Q2 to £4 billion in Q3, meaning the amount of debt finished the quarter at almost double of that seen 12 months previously.

Borrowing levels recorded a rise, figures also show, with 31p borrowed for every pound saved, representing a high for 2009, and up from 27p for every pound saved during Q2.

It marks a turnaround from the second half of 2008, when consumers showed an appetite to clear their personal deficits, with £1.61 of debt repaid for every pound saved.

Consumers have been warned that they may be putting any economic recovery in jeopardy.

"After the dramatic retreat from savings in favour of paying off personal debt in the first half of 2008, consumers are now slipping back into old habits, by borrowing around a third of what they save," commented Karen Barrett, chief executive of unbiased.co.uk

"While our year on year data shows that this is reasonably good for a normal economic cycle, with savings levels currently billions lower than they were back in 2006 and 2007, this is creating a serious barrier to a sustained economic recovery."

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