Brits Saving £1 Trillion by 2012

Brits are on course to put away as much as £1 trillion in savings by 2012, with balances having doubled since the turn of the century. It would appear that the message from government and financial advisors may have got through with many more people putting some money away for their future.

Balances since the year 2000 are up by £426 billion – five times the increase in unsecured borrowing (£79 billion), according to research carried out by YouGov on behalf of Alliance & Leicester. What's more, almost two fifths (39 per cent) are planning to increase their savings balance over the next five years.

Commenting on the study, professor Merlin Stone of Bristol Business School said: "Today, we have a savings paradox.  Households appear to be stretching themselves to meet increased taxation and a general rise in the cost of living.  However, perhaps surprisingly, overall savings balances have continued to increase. 

"It seems that the pressure has fallen on pension contributions.  Evidence suggests that people in their prime years are saving more cash with a view to funding their retirement."

However, while 39 per cent of people feel saving is necessary for their financial future, almost a quarter (24 per cent) have no savings at all, with 75 per cent of those with no savings saying the main reason for not having any cash savings is lack of spare income.  Meanwhile, one in eight (12 per cent) feel they lack the discipline to save and a hedonistic two per cent say saving is unnecessary and that one should "live for the day".

Of the savings accounts on offer, Instant Access Accounts have grown in popularity recently - a phenomenon attributed to the increase in popularity of internet banking and e-savings accounts. A total of 40 per cent of cash savings are now managed in online savings accounts – four times the amount five years ago. 

According to Apacs, the five-year growth statistics for online banking show that the number of adults in the UK using online banking has increased by 174 per cent from 6.2 million in 2001 to 17.0 million last year. This includes a 350 per cent increase in usage among the over 55s.

Brian Capon, a spokesperson for the British Bankers' Association, said recently: "People like the flexibility and immediacy of the internet. It is instant and I think that's part of the appeal of internet banking, not just for banking but as a society these days."

As a result balances in instant access accounts are up 60 per cent to over £5,000. Disciplined and Regular Savings Accounts have also increased in popularity - a trend that looks set to continue. However, this seems to be at the expense of Notice Accounts, with virtually no new accounts being opened and balances falling dramatically.

Disclaimer:
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.