A recent report released by Alliance & Leicester revealed that Britain's savings have nearly doubled since the turn of the Millennium, with balances up GBP426 billion, which is five times the increase in unsecured borrowing.
‘The Changing Face of the Savings Market’ report revealed that only 2% of people think saving is unnecessary and that one should ‘live for the day’. In contrast, 39% of people feel saving is necessary for their financial future. One in four people have no savings at all, with three quarters of them saying the main reason for not having any cash savings is lack of spare income.
Instant access accounts have grown in popularity, more than half of the nation’s cash savings are in this type of account now with the average account balance up 60% to over GBP5,000. The cash individual savings account (ISA) balances have more than doubled in the same period, now accounting for a fifth of all cash savings.
Ewan Edwards, head of savings at Alliance & Leicester, said: If current growth continues, then in the next five years personal cash savings could grow to around GBP1 trillion.
We are also seeing big changes in the types of accounts favored. Five years from now Britain’s savvy savers are likely to have over a third of their cash savings in tax efficient accounts such as ISAs – a massive increase from five years ago, when just a seventh were sheltered from the tax man in this way.