Copy article

Household saving ratio rises to 11.1%: "Nervousness is causing people to stash rather than spend their cash"

ended 28. June 2024

According to official data published by the ONS this morning, the household saving ratio was estimated to be 11.1% in Q1, up from 10.2% in Quarter 4 (Oct to Dec) 2023. It added: “Following seven quarters of pension saving contributing more to the savings ratio, this is the second quarter that non-pension saving contributed more to the savings ratio.” Newspage asked money experts why this is happening. Their views are below.

4 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The reason for the increased savings ratio could be put down to the lack of confidence in the economy. Nervousness is causing people to stash rather than spend their cash. This could, of course, lead to an economic downturn. The savings ratio is a good barometer of economic sentiment. However, with easy access savings accounts, such as Chase, paying over 5%, more people are making use of their money rather than spending it or stashing it in their pensions. With higher interest rates and gross interest payments, more savers will be caught up in having to complete a self-assessment this year.
Star Quote
Copy

Editor
Wes Wilkes
CEO at IronMarket Wealth
It's great news that the UK savings rate is up. Whisper it only, but savings accounts may be back in fashion. Seeing some kind of return on savings after nearly 15 years of nothing has definitely attracted savers. Couple this with higher wage growth in recent years and some excellent habits are being formed. With interest rates pretty much at their peak, it will be interesting to see how savers react when those rates start falling.
Star Quote
Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
What's clear is that more people are building a rainy-day fund given that all the forecasts show storms ahead, both political and economic. Uncertainty incentivises people to save. Better interest rates due to the higher base rate have also played their part in encouraging savings. The ease of access also suggests people want to know they can access their cash if need be.
Copy

Editor
Dariusz Karpowicz
Director at Albion Financial Advice
The rise in the household saving ratio to 11.1% is a pleasant but welcome surprise. It appears that the combination of increased wages, reduced National Insurance contributions and a little caution amid the economic uncertainty is leading people to squirrel away more money. Instead of splurging, households are putting their extra income into savings accounts rather than pensions, which gives them easier access in these unpredictable times. Despite higher taxes on income and increased spending, people are managing to save more. It's a clear sign that households are becoming more financially savvy and are building their rainy day funds.