A&L reports shows Britain is becoming a nation of savers

Perhaps surprisingly given that, as ominous headlines seem constantly to remind us, our budgets are being increasingly stretched by raising interest rates and spiraling debts, Brits are actually saving more money than ever.

According to a report by Alliance and Leicester Britain’s savings have nearly doubled since the start of the Millennium and, if current growth continues, could hit the £1 trillion mark within the next five years.

The findings provide an encouraging relief from the general atmosphere of economic doom and gloom and provide evidence that Britain is increasingly becoming a nation of savvy financial operators. Professor Merlin Stone of Bristol Business School said: “Today, we have a savings paradox.  Households appear to be stretching themselves to meet increased taxation and a general rise in the cost of living.  However, perhaps surprisingly, overall savings balances have continued to increase.  It seems that the pressure has fallen on pension contributions.  Evidence suggests that people in their prime years are saving more cash with a view to funding their retirement.” 

The A&L survey shows that most of us are well aware of the importance of saving; indeed just 2% of those surveyed thought that saving was unnecessary and preferred to manage their finances in accordance with the philosophy that one should “live for the day”. Interestingly, of the 39% who believed saving to be necessary the under 35’s were most strongly represented, another positive sign that young Brits are taking a more responsible approach to their money than perhaps they’re often credit with.

It isn’t all good news however, a quarter were found not to have any savings at all; with far and away the most popular reason being that they simply lack any spare income, a further 12% admitted that they lack the discipline to save.

The report also highlights a general shift in the way people are saving and the types of savings account they are using. Again, perhaps driven by the increased availability of information and advice in the internet age and particularly the ease with which comparison sites allow us to find better deals, people are increasingly savvy about how they save.

Ewan Edwards, Head of Savings at A&L points out that we are seeing “big changes in the types of accounts favoured.  Five years from now Britain’s savvy savers are likely to have over a third of their cash savings in tax efficient accounts such as ISAs – a massive increase from five years ago, when just a seventh (14%) were sheltered from the tax man in this way.”

In fact the report shows a rise in tax efficient savings from 14% in 2002 to 21% this year and predicts that this is a development that’s likely to go on; Edwards continued: “We expect many of the trends over the last few years to continue with overall savings balances rising and further growth in tax efficient savings such as ISAs, Instant Access accounts and different types of ‘disciplined’ savings.”

Research conducted by YouGov on behalf of A&L Savings.

Find out more about Alliance and Leicester Savings Accounts by visiting A&L Savings