A steady stream of bad news about the pensions crisis and the UK's debt mountain has finally persuaded Britons to save more. Savers put more cash into building society accounts in January than they have since 2001, the Building Societies Association (BSA) said yesterday.
The BSA said the total amount invested in savings accounts last month rose by £212m, a significant turnaround on January 2005, when savers actually withdrew £299m of cash.
January is typically the worst month of the year for savings, as people raid their accounts to pay credit card bills and Christmas-related debts. But Adrian Coles, the BSA's director-general, said there had been a significant "mood change" among savers.
"The housing market has calmed down, as has most people's appetite for taking on more debt," Mr Coles said. "People have finally decided they need to save more for the future, even if they don't use pension schemes to put money by."
Alex Bannister, at Nationwide, the country's largest building society, said consumers had become increasingly cautious. "People have become concerned about rising costs, such as higher energy bills, and they have decided to save more to protect themselves," he said. "Also, disposable incomes have risen and with continuing low interest rates, mortgage repayments are less demanding."
Philip Stubbins, at Britannia Building Society, said tax breaks and competition between savings providers had also boosted the sector.
"Cash individual savings accounts paying tax-free interest have been a major theme," he said. "There has also been a marked proliferation of new accounts, such as regular savings vehicles, paying interest rates that stand out."
Cash ISAs took in £51m of savers' money last month according to the BSA, a 34 per cent increase on January 2005's total of £41m.
The latest savings figures are further evidence that the UK's savings ratio - the proportion of household income saved - is creeping up. The most recent Government estimates, for the third quarter of 2005, put the savings ratio at 5.5 per cent, up from a low of 4.1 per cent in early 2004.
Last week, Barclays became the latest bank to launch a regular savings account with a headline-grabbing rate of 10 per cent - following in the footsteps of Halifax and Alliance & Leicester. However, strenuous terms and conditions are attached to the accounts.Reuse content