Savings in sharp decline

New data from the Office for National Statistics (ONS) has revealed that the proportion of UK residents’ disposable income that goes into savings has fallen to a record low.

The ONS latest study found that the savings ratio, which measures the outgoings and incomings that affect households, had fallen to 1.7 per cent during January to March, down from 3.3 per cent in the previous quarter.

This is because, for the first time since the 1970s, disposable income has fallen for three quarters in a row.

Darren Morgan, Head of GDP at the ONS, said: “The saving ratio has fallen again this quarter to a new record low, partly as a result of higher tax payments reducing disposable income.

“Some of the fall could be as a result of the timing of those payments, but the underlying trend is for a continued fall in the saving ratio.”

And yet ‘traditional’ savings may soon become popular again thanks to rising interest rates as a result of growing inflation, with many suggesting that the Bank of England may increase the base rate in the months to come. 

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