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Frustration over Govt policy on savings

Wednesday, March 06 10:50:12

The Nationwide UK (Ireland) / ESRI Savings Index has recorded its highest ever level of dissatisfaction in government policy with regard to saving.

In February, 60pc of people stated that government policy discourages saving - an increase of 2 percentage points since last month.

The Savings Index declined two points in February to 83, while the Environment sub-index which measures people's attitudes towards government policy and the general savings environment fell six points to an all time low of 70.

Just 5pc of people think that government policy encourages saving - another record low for the Index and a 4pc decline from January. Despite the negativity towards government policy there was increased optimism towards the general savings environment with 26pc believing that now is a good time to save up from 23pc last month.

Another positive recorded by the overall research in February was an increase in the percentage of people who would spend surplus cash. In February 12pc stated that they would spend the money, the highest level recorded since April 2011. However, the majority of people, 47pc, continue to state that they would use surplus cash to pay off debts including their mortgage.

Commenting on the Index, Brendan Synnott, Managing Director of Nationwide UK (Ireland) said, "Since December there has been a marked increase in negative sentiment towards government policy on saving and this is the main reason for the overall index trending downwards. The increase in Deposit Interest retention Tax to 33pc in the last budget combined with the pending household and water charges are clear reasons for these results. Over the coming months, we will find out whether this increased negative sentiment is temporary or becoming the new base level of opinion for policy on saving."

"On a more positive note, preference to spend any spare cash that may be available (as opposed to save or pay down debt) increased to 12pc, its highest level since April 2011. It is however prudent to wait to see if this trend becomes established before making any conclusion on consumer demand since recent retail sales data for January showed a decline on a monthly and annual basis."

The Savings Attitudes sub-index made a modest gain in February rising 2 points to 96. An increase in the percentage of people who are positive about the amount they are saving from 14pc to 15pc and a decline in those who are negative about the amount they are saving from 64pc to 61pc continued the upward trend in this sub index witnessed over the course of the past three months.

According to the latest Savings Index data, 26pc are saving regularly which is down 3pc from January. There has been a slight increase in "Occasional" saving up to 29pc (up 3pc) and those not saving at all decreased slightly in February to 45pc from 46pc last month.