Halifax shows UK householders saving less

Research undertaken by Halifax has shown that UK householders are saving less than average.

The proportion of post-tax income that households save rather than spend is currently just 5.6 per cent, below the average of 7.9 per cent taken over the last 42 years.

The year in which people saved the most was 1980, when the saving ration was 12.4 per cent, compared with the lowest years, 1988 and 1999, when people saved only 4.9 per cent of their post-tax income.

The savings ratio follows the economic cycle in the UK, such that when the economy is strong, people tend to save less, and vice versa.

It is also strongly linked with the housing market, meaning that when house prices are rising rapidly, people feel more confident and save less.

The UK saves significantly less than the other two largest European countries, the report found, with France showing a savings ratio of 10.2 per cent and Italy at 11.3 per cent.

Commenting on the results, Martin Ellis, economist for Halifax financial services, said:
"The saving ratio remains very low by historic standards although it is above its 1999 trough. Customers clearly save less in the good times and put more away for a rainy day when the economic outlook is less promising.

"The saving ratio is probably best seen, therefore, as a good barometer of the overall state of the economy."