UK savers confident about 2010 and many expect to increase savings in next six months

News - Savings

Tuesday, 15 December 2009 12:30

Consumers confidence in their ability to accrue savings has increased steadily throughout the year with only 14% expecting the economy to be worse in six months time than it is now, according to new research.

The Nationwide Building Society's Future Savings Index hit 124 points in November, the highest since May 2008, with more people believing they will increase their savings in six months' time compared to those who believe they will be saving less.

But Nationwide’s Savings Index fell 87 points in line with consumer sentiment that Government policy is failing to help savers and amid general concern about the economic environment.

Some 16% of people believe the Government encourages them to save, down 4% from October, but a much larger 45% believe the Government discourages them from saving.

However more people are seeing the importance of saving, with 60% of consumers feeling it is important to save in general, a 1% rise from October, and an increase of 3% on last month in people who feel it is important for them personally to save, according to the research.
‘Although the Savings Index fell by three points, it is still at its second highest level this year and there are some real positives to take from November's data. For example, the Future Savings Index hit an all time high. This may reflect a greater confidence in the economy in general, which should be seen as a positive step,’ said Andy Hutchinson, head of savings at Nationwide.

Hutchinson added that last month's optimism following changes in ISA rules for the over-50s appears to have died down.
Nationwide’s research also shows that although confidence hit a record low almost a year ago it has remained broadly unchanged for the third month in a row during November as people remained upbeat about the future economic situation.

Nationwide's consumer confidence index held steady at 73 during the month, leaving it only slightly below its recent high of 74 reached in September. People's confidence has been improving steadily throughout the year after the index hit a record low of 45 in January.
The recent stabilisation has been driven by people feeling more upbeat about the future, with only 14% expecting the economy to be worse in six months' time than it is now, the lowest level recorded since the index began in May 2004.

But people are slightly less optimistic about the present situation, with the proportion of people thinking the economy is currently in bad shape rising to 70% during the month, while 67% said they thought there were currently few jobs available.
‘Confidence remained stable in November, suggesting that consumer sentiment is holding steady at the end of a volatile year for the index. In the last few months, consumer confidence has lost some of the upward momentum evident earlier in the year and this is largely due to ongoing pessimism about the current economic situation rather than expectations for the future,’ explained Martin Gahbauer, Nationwide's chief economist.

‘The downbeat assessment of the present situation is consistent with recent news that the UK has been slower to come out of recession than other countries,’ he added.

The spending index increased by two points to 106 during November, following a slight increase in the number of people who think it is a good time to make a major purchase, such as a house or car, while the proportion who thought it was a good time to buy household goods remained unchanged. The number of people who think it is a bad time to make a major purchase fell to 34% during the month, the lowest level since April 2006.