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More people in to regular saving habit

Tuesday, August 12 10:46:50

July saw more people get in to the habit of regular saving, according to the latest Nationwide UK (Ireland)/ ESRI Savings Index, which measures overall sentiment towards saving.

The index increased to 102 in July, a seven point increase versus the previous month.

This was mainly driven by an 18 point jump in the Savings Attitude Index, one of two sub-indices that make-up the Savings Index. This index, which asks people about their saving behaviour and how they feel about the amount they save, increased to 127 from 109 last month.

In July, the proportion of people saving regularly increased to 41pc from 35pc last month. This increase is occurring amongst both the over 50s and under 50s age-groups. Since January, the level of regular saving has gradually improved and this month's data represents a return to the normal long-term level of saving amongst consumers and a reversal of a decline which started in autumn 2012.

However, major concerns remain about whether the current period is a good time to save and whether government policy encourages people to save. The Savings Environment sub-index, which gauges opinion on economic conditions and the impact of government policy on saving, decreased to 78 from 80 last month and 118 in July 2013. The savings environment index has now been in decline for four consecutive months.

The proportion of people who believe that now is a good time to save fell to 25pc in July from 26pc last month and 32pc a year ago. The proportion of people who say that government policy discourages saving increased to 66pc in July from 65pc last month and 57pc a year ago.

When asked about their preference as to how they might allocate any money over and above their everyday needs, consumers' preference to paying down debt is declining. 40pc of people would now use surplus cash to pay off debts, a 6pc decrease from last month and 14pc said they would spend it, an increase from 13pc last month. Meanwhile, 38pc of people would save the money, an increase from 34pc last month.

Commenting on the Index, Brendan Synnott Managing Director of Nationwide UK (Ireland) said: "The increase in the index this month reflects the improvement in the overall economy. It appears that people have absorbed the impact of the property tax introduced in 2012 and are now rebuilding their personal finances."

For more visit: www.businessworld.ie