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UK gets back on its savings feet

UK gets back on its savings feet

Category: Savings

Updated: 27/09/2010
First Published: 27/09/2010

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 It is now over 6 months old so the content may be out of date.

People are beginning to re-adopt old savings habits after the effects of the recession saw levels fall significantly.

In 2009, the savings position of UK households improved considerably, with £41 billion added to savings – including pensions, shares and deposits – in the year.

It marked a more than four-fold increase from the £10 billion of new savings in 2008, a figure that was markedly down on the previous ten year average of £80 billion, according to Lloyds TSB.

The economic downturn had a dire effect on savings levels, as households either saw disposable income fall or decided not to tie their money up at such uncertain times.

Last year's improved figure saw the total savings for the period between 2000 and 2009 rise to £802 billion, 46% more than in the 1990s.

Taking inflation into account, savings levels rose by 14% in 2000-2009, compared with 1990-1999.

The significant increase in new savings was driven by a substantial rise in deposit based savings, which was driven by the launch of ISA accounts in 1999 that have been taken up in huge numbers.

"This has been a significant decade for savers in the UK," said Suren Thiru, economist at Lloyds TSB.

"The substantial rise of new household savings over the past ten years reflects the extent to which savers have worked hard to build their nest-egg.

"The level of new households' savings has weakened somewhat over recent years as a consequence of the financial crisis, the low official bank rate and the well documented repayment of debt during the same period.

"However, there have been signs of improvement over the past year."

If you think you're in the position to start saving again, there is a huge array of accounts on the market that will suit a range of circumstances.

If you'd like to see a decent return on your funds over the next year and are happy to tie your money up for the period, Northern Rock offers a fixed rate of 3.00% on deposits starting from just £1.

Should you prefer to lock your money away for slightly longer, Stroud & Swindon offers a fixed rate of 3.70% on a two year bond.

Find the best savings rates for you - Compare savings accounts

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