Research from Halifax has found that the UK savings ratio has fallen, nearing its record low of 4.9%. The survey shows that the current average of income that households save has dropped to 5.6%. This compares to a high of 12.4% in 1980, when the economy was experiencing a recession, and a low of 4.9% in 1988 and 1999, when the market was buoyant.
The UK has the lowest savings ratio in Europe. The only other countries in the world with lower ratios are the US with 0.8% and Japan with 5.1%.
Halifax believe that the survey shows the influence of inflation on the savings ratio, with people feeling a greater need to save during recession years and increasing inflation, compared to times when inflation is low.
Our view
The Government message of the need to save more is not getting through. Perhaps the live for today attitude of the British is based upon the fact that you are penalised in later life with lower benefits and support if you have bothered to save or have a bigger pension.
What is the point if people who do not bother to save get free treatment, higher benefits and more. The concept of means testing in later life is one of the major problems.
As advisers, we are obliged to tell clients that if they save they may lose benefits - is it any wonder that people live for today?