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Brits saving more in credit crunch

23/05/2008

Brits are saving more as their confidence in the economy dwindles, a survey has found.

Research from Birmingham Midshires shows people have saved an average £938 compared with £910 in the same period a year ago.

In addition, savers are being more disciplined - people have raided £1,700 this year, down from over £2,000 in 2007.

Although there has been a notable rise in the cost of living, more than six in ten Britons (63 per cent) have managed to save in the last three months, the survey of 2,000 people found.

However, the number of people unable to save for their future is increasing - one in four people (24 per cent) say they have not saved anything in the last three months compared with 20 per cent this time last year.

Tim Hague, director of savings and investments at Birmingham Midshires, said: "This research shows how current market conditions are playing on the minds of Britons.

"Despite a marked increase in living costs, people are becoming more cautious and managing to save more and spend less, with their financial future in mind.

The building society warned against 'raiding' savings accounts after putting the money away.

"We recommend that savers have the equivalent of at least three months' salary in their savings accounts," Mr Hague said.

The main reasons for raiding, Birmingham Midshires said, remain very similar year on year - one in four admitting to overspending on their current account (25 per cent) and one in five taking a holiday (21 per cent).

But new in 2008, the third highest reason for people raiding their savings are current price rises in bills, with one in seven (14 per cent) having to raid due to higher than expected outlays on heating, fuel and electricity.