THE SAVING REPORT - LEGAL & GENERAL MONEYMOOD SURVEY.
11 June 2012
The MoneyMood Survey shows a significant proportion of households in the UK can afford to save even though the economy is in recession.
Around 8 million households (41%) say they can afford to save each month. However, this is around 400,000 less than the equivalent figure (43%) in June last year, which perhaps indicates that the recession is having some impact on household savings.
The MoneyMood figures suggest the economic climate is affecting savings in two ways;
Firstly savers are saving less each month on average. The latest figures show the average monthly saving (for those households who say they can afford to save) is £71 across the UK, down £22 per month (24%) since January (£93). Regionally homes in the South, East Anglia and East Midlands appear to be feeling the crunch the most with the biggest fall in saving in April compared to the start of the year.
And secondly, fewer households are adding to their savings. Although around 2 in 5 households can afford to save, MoneyMood found that only one in five (21%) intend to add to their savings over the coming month. Again this is slightly down on the same period last year when 25% of households said they expected to add to their savings.
MoneyMood Survey ® “Can afford to save” versus “Will add to savings” April 2012. (To view this chart please click on the link on the right of this page.)
REGIONAL DATA - How much can you afford to save at the end of each month?
Homes in London, the South East, the South West, East Anglia and the East Midlands have all seen a significant drop in the level of monthly saving since the start of the year. Those in Wales, the West Midlands and Northern parts of the UK appear to be saving around the same, or slightly more on average than they were in January. The biggest fall in the level of monthly savings is the East Midlands, down two thirds (67%) compared to January. In East Anglia monthly saving is down 60% and in London saving per month has halved. (To view this chart please click on the link on the right of this page.)
MoneyMood Survey® What are we saving for?
Saving for the unexpected events in life, putting money aside for a holiday and home improvements are the top reasons for medium to long term saving. Not surprisingly, given the current economic climate, “Saving in case I lose my job” has re-appeared in the top five, perhaps reflecting worries about rising unemployment.
The top five reasons for saving this year are:
- Saving for a rainy day = 65% - (up slightly on last year - 62% in April 2011)
- Saving for a holiday = 53% (down slightly versus 57% in 2011)
- Savings for home improvements or decorating = 39% (35% in 2011)
- In case I lose my job = 29% (27% in 2011)
- To save for a pension = 29% (36% in 2011)
(To view this chart please click on the link on the right of this page.)
Saving becoming less attractive:
Commenting on these findings Mark Gregory, Legal & General Executive Director Savings said; “We are seeing savers becoming disgruntled with the rate of return they are getting as the gap between interest rates and the rate of inflation looks set to remain at current levels for some time yet. In our survey 2 out of 5 (37%) said they would like to see some extra income from the money they have saved. The result is less saving - our figures indicate that the number of households who expect to add to their savings each month is only around half the level of those who can afford to save.
For those who are saving, we have seen an increase in the numbers saving for the short term - “Saving for a Rainy Day”, possibly reflecting concerns over the need to be able to access their savings quickly. Saving “In case I lose my job” is also showing an increase, perhaps indicating growing worries over unemployment. In contrast, understandably, saving for the longer term such as “to save for a pension” has gone down year on year. We would hope that this is a temporary shift driven by economic concerns such as falling interest rates and the recession, which tend to have a negative impact on consumer confidence, and that savers will perhaps transfer some of their short term savings to longer term once we have weathered the storm.”
REGIONAL DATA – change in the number of households that can afford to save:
Across the UK the number of households saying they “Can afford to save” has fallen by around 400,000 year on year. This seems to show a North/South divide in a number of regions. Year on year the number of homes saying they can afford to save is much higher in the N East, N West, East and West Midlands, Scotland and also up slightly in Wales. But in the South East and South West, East Anglia and London fewer households have money left over for savings after paying bills and we have seen a significant drop in the number who “Can afford to save” in the Yorkshire and Humberside region.
Change in number of households who can afford to save.
|Region||Can afford to save June 2011 %||Can afford to save April 2012 %||Change %||Change in number of households who can afford to save||Based on Households per region (million)|
|North East||38||56||+18||Up 144,000||0.8|
|North West||46||49||+3||Up 69,000||2.3|
|Yorks and Humberside||57||30||-27||Down 486,000||1.8|
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