ONS savings rate hits a minus

by Gill Montia

Story link: ONS savings rate hits a minus

Official figures from the Office for National Statistics (ONS) show the extent to which hard-pressed Britons are relying on savings to ride out the credit crisis.

During the first quarter of 2008 the UK’s savings rate, which is based on the amount of money being set aside from pay packets, fell to -1.1%.

According to the ONS, it is the first negative savings rate for sixty years and followed a positive rate of 1.8% in the final quarter of 2007.

Average income over the three months to the end of March stood at £3,751, and average expenditure at £3,792, leaving a deficit of £41 for the quarter.

A slight recovery was staged in the second quarter of 2008, with the average person saving £16.

However, as families tightened their belts to cope with rising mortgage, fuel and food costs, total consumer spending fell £250 million in the three months to the end of June.

The trend is expected to continue throughout the remainder of the year as the UK slides into a recession.

Those fortunate enough to save even £16 in a quarter will find attractive rates on the High Street as banks compete for deposits in efforts to reduce their reliance on the wholesale money markets.