- Contrary to popular belief, Britain is a nation of savers, with 80 per cent of the population currently owning a savings account
- Only a third of people don’t pay into their savings regularly
- Brits are most tempted by incentives (34.1 per cent) and high rates (33.6 per cent), rather than recommendations from friends (16.8 per cent)
- People moving away from cash ISAs to easy access accounts
To mark the start of British Savings Week, new research from MoneySuperMarket, the UK’s leading comparison site, today maps the nation’s attitudes towards saving money and uncovers the regional saving hotspots.
Contrary to popular belief, four in five people in the UK currently own some form of savings product, be it a cash ISA, easy access savings account or even a fixed rate bond. However, far fewer regularly top up their savings, with two-thirds (62.4 per cent) putting money in on a monthly basis and 22.1 per cent just twice a year or even less frequently[i].
Of those who don’t currently own a savings account, 41.5 per cent say it’s because they never have any money to put aside and a further 17 per cent note that putting money elsewhere, such as in a high interest current account, makes better financial sense.
The data also uncovers significant regional differences, with those in Portsmouth the least likely to have a savings account (58.8 per cent), compared to those in Chelmsford (93.2 per cent).
Cities where people are least likely to own a savings account:
|City||Percentage of population with a savings account|
|Portsmouth||58.8 per cent|
|Birmingham||70.3 per cent|
|Gloucester||72.2 per cent|
|Leeds||73.6 per cent|
|Wolverhampton||73.9 per cent|
Cities where people are most likely to own a savings account:
|City||Percentage of population with a savings account|
|Chelmsford||93.2 per cent|
|Wrexham||92.9 per cent|
|Norwich||92.1 per cent|
|Brighton and Hove||89.1 per cent|
|Cambridge||89.1 per cent|
When looking at why Brits choose to switch savings account, the impact of personal recommendation pales in comparison with accounts that offer incentives or higher rates of interest. Only 16.8 per cent of the population would choose a savings product based on a personal recommendation from a friend or family member, whereas 34.1 per cent would switch for an incentive and 33.6 per cent say they’d move for an account that offers a high rate of interest. A further 31.9 per cent said nothing could tempt them to switch from their current savings account.
Product clicks from MoneySuperMarket’s savings channel also show that the market is gradually shifting from cash ISAs to easy access accounts. Whilst cash ISAs are still the most dominant in terms of market share, accounting for 37.6 per cent of all clicks on the channel, their share has dropped from 46.5 per cent just two years ago. The biggest rise is with easy access savings accounts, where market share has risen over four per cent in two years (19.8 per cent in July 2016 to 24 per cent now). Fixed rate bonds also remain a popular option, with over 30 per cent opting to explore this type of savings vehicle[ii].
Sally Francis-Miles, money spokesperson at MoneySuperMarket, commented: “The financial crash of 2008 hit savers hard and the market has yet to fully recover. £1,000 put into a savings account in the decade leading up to the crash grew to a total of £1,652 on average, whereas money put into a savings account from 2008 to 2018 has grown to £1,149 – a noticeable difference. However, savings accounts are still popular and a great way to grow your money.
“There are a lot of options out there in terms of savings products, from fixed rate bonds to easy access savings accounts, but consider your personal needs and do your research before choosing. Generally speaking, the longer you can lock your money away for, the better return you’ll receive, although this does usually mean sacrificing access to your cash for typically one to five years and you’ll need a lump sum to make it worthwhile. Whatever savings option is right for you, start saving early to make the most of your hard-earned cash, add to your pot on a regular basis and resist the temptation to take it out unless it’s necessary or you have planned for it.”
Visit MoneySuperMarket for more information on which savings products are available in the market, along with tips and tricks to help you get the most out of your money.
[i]All stats, unless otherwise stated, are taken from a poll of 2,000 nationally representative UK residents, aged 18+, undertaken by OnePoll between 5thSeptember 2018 and 10th September 2018. A full data breakdown is available upon request.
Sunak warns of bill to be paid to tackle Britain’s ‘exposed’ finances – FT
(Reuters) – British finance minister Rishi Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.
Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”
UK exposure to a rise of one percentage point across all interest rates was 25 billion pounds ($34.83 billion) a year to the government’s cost of servicing its debt, Sunak told FT.
“That (is) why I talk about leveling with people about the public finances (challenges) and our plans to address them,” he said.
The government has already spent more than 280 billion pounds in coronavirus relief and tax cuts this year, and his March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown.
He is also expected to announce a new mortgage scheme targeted at people with small deposits, the UK’s Treasury announced late on Friday.
Additionally, the government will also announce a new 100 million pound task force to crack-down on COVID-19 fraudsters exploiting government support schemes, it said.
(Reporting by Bhargav Acharya in Bengaluru; Editing by Leslie Adler and Cynthia Osterman)
G20 promises no let-up in stimulus, sees tax deal by summer
By Gavin Jones and Jan Strupczewski
ROME/BRUSSELS (Reuters) – The world’s financial leaders agreed on Friday to maintain expansionary policies to help economies survive the effects of COVID-19, and committed to a more multilateral approach to the twin coronavirus and economic crises.
The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.
“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after the videolinked meeting held by the G20 finance ministers and central bankers.
The United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies through lockdowns.
But despite the large sums, problems with the global rollout of vaccines and the emergence of new coronavirus variants mean the future path of the recovery remains uncertain.
The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.
The meeting was the first since Joe Biden – who pledged to rebuild U.S. cooperation in international bodies – U.S. president, and significant progress appeared to have been made on the thorny issue of taxation of multinational companies, particularly web giants like Google, Amazon and Facebook.
U.S. Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.
“GIANT STEP FORWARD”
The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.
Scholz said Yellen told the G20 officials that Washington also planned to reform U.S. minimum tax regulations in line with an OECD proposal for a global effective minimum tax.
“This is a giant step forward,” Scholz said.
Italy’s Franco said the new U.S. stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.
The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.
On this front there was broad support for boosting the capital of the International Monetary Fund to help it provide more loans, but no concrete numbers were proposed.
To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by Trump.
“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.
While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.
The recovery is fragile elsewhere too. Factory activity in China grew at the slowest pace in five months in January, and in Japan fourth quarter growth slowed from the previous quarter.
Some countries had expressed hopes the G20 may extend a suspension of debt servicing costs for the poorest countries beyond June, but no decision was taken.
The issue will be discussed at the next meeting, Franco said.
(Additional reporting by Andrea Shalal in Washington Michael Nienaber in Berlin and Crispian Balmer in Rome; editing by John Stonestreet)
Bank of England’s Haldane says inflation “tiger” is prowling
By Andy Bruce and David Milliken
LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.
In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.
“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”
Haldane’s comments prompted British government bond prices to fall to their lowest level in almost a year and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation or BoE rates.
“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.
He pointed to the BoE’s latest estimate of slack in Britain’s economy, which was much smaller and likely to be less persistent than after the 2008 financial crisis, leaving less room for the economy to grow before generating price pressures.
Haldane also cited a glut of savings built by businesses and households during the pandemic that could be unleashed in the form of higher spending, as well as the government’s extensive fiscal response to the pandemic and other factors.
Disinflationary forces could return if risks from COVID-19 or other sources proved more persistent than expected, he said.
But in Haldane’s judgement, inflation risked overshooting the BoE’s 2% target for a sustained period – in contrast to its official forecasts published early this month that showed only a very small overshoot in 2022 and early 2023.
Haldane’s comments put him at the most hawkish end among the nine members of the MPC.
Deputy Governor Dave Ramsden on Friday said risks to UK inflation were broadly balanced.
“I see inflation expectations – whatever measure you look at – well anchored,” Ramsden said following a speech given online, echoing comments from fellow deputy governor Ben Broadbent on Wednesday.
(Editing by Larry King and John Stonestreet)
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