Consumers start viewing saving favourably

The saving situation in the UK is beginning to pick up although consumers are still unsure about whether this is the right time to start putting money away, new figures have shown.

Consumers are beginning to feel cautiously optimistic about the economy, according to the Nationwide Savings Index for April, which has registered a marginal improvement of two points to 75.

However, this level is still 25 points below the point at which the index kicked off in June 2008 and the increase may also be a reaction to the Bank of England's Monetary Policy Committee's decision to leave rates frozen, Nationwide said.

The importance of saving index jumped by one point to 77 and now more than half (56 per cent) of consumers believe saving is important, although less than half (47 per cent) of British people do actually save regularly.

More worryingly, one in four consumers do not save anything, while 59 per cent of people put away less than they think they actually need. Only 28 per cent believe they are saving the right amount.

The government has also been blamed for coming up with policies that are discouraging more than half (56 per cent) of consumers from saving.

When focusing on the future, the picture is not very good either because one in four (24 per cent) believe they will be saving a smaller amount of money than they are currently.

Commenting on the figures, Nationwide's head of savings Lee Raybould said consumers are still viewing the savings environment with pessimism.

"The large share of respondents saying that government policy discourages them from saving may reflect disappointment with the very low level of interest rates currently prevailing," he explained.

"However, a comparison of current savings rates with the higher rates seen last year only tells part of the story, as it does not take into account the recent sharp falls in the rate of retail price inflation."

According to Mr Raybould, it pays to save because when inflation was sky-high last summer, "the real return on fixed-rate savings bonds was actually lower than it is now".

Meanwhile, savers have been presented with more choice in the form of two new fixed-rate savings accounts from Saga.

The company has announced a new four-year fixed-rate savings account for the over 50s that offers a competitive annual equivalent rate of 4.35 per cent as well as a two-year fixed rate savings account presenting a rate of 4.15 per cent.

According to Saga, the two accounts "offer more flexibility than other fixed-rate accounts available on the market" due to the fact that they allow customers to access their money during the fixed-rate term of investment.

This, the company states, offers peace of mind to consumers because they know their money is "still close at hand".

© Adfero Ltd