that savings levels in the European nation reported a sharp decline, reaching £7.1 billion in July, in stark comparison to the previous month, when £9.8 billion was set aside. According to experts, although the summer holiday season is encouraging Britons to cut their healthy spending habits, there are several factors which contributing to decline in savings, including the fall in interest rates to a “historic low”.
In the month of July, the interest rate paid on new time deposits with banks reached 0.29 per cent, a decrease by two whole basis points from the previous month, while rates on 0.38 per cent was offered on the outstanding stock of time deposits. Meanwhile, sight deposit rates were maintained at 0.10 per cent. “As the kids broke up from school and summer holidays began we all started spending more and saving less,” Laura Suter, Head of Personal Finance at AJ Bell, said. “But it’s clear to see why people might decide to get out and spend their money instead of saving it, as interest rates on deposits fell yet again to another historic low.”
Meanwhile, a recent study found that Britons are £371 billion from the size of collective savings required to withstand future unexpected financial shocks. According to Yorkshire Building Society and the Centre for Economics and Business Research in London, typically people have a savings pot of around £10,245, although they would ideally need to have about £17,465 tucked away in savings in to “feel financially secure”.
Nevertheless, the two organisations noted that the UK’s overall financial resilience saw a noteworthy improvement, particularly as a result of the healthy spending habits which people adopted during the pandemic.
