Most households in the UK cannot afford to save

Ben Southwood
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UNDER half of UK households can afford to put money away after dealing with tax, bills and debts, research revealed this morning.

The fraction of households saying they had money left after dealing with basic expenses slid from 51 per cent to 49 per cent between January 2012 and January 2013, the figures from Legal & General said.

But despite this falling fraction, the amount saved by households that could afford it rose 10.8 per cent over the year, from £93 per month when asked in January last year to £103 per month when asked January this year.

The capital led the savings boost – the average amount saved soared 50.9 per cent from £159 to £240, Legal & General said. Though they could not reach such a high level, the increase was even bigger in Yorkshire and the Humber, where the average put away climbed from £34 to £131 over the year.

But the trend was by no means universal, with East Anglia, the south west and the East Midlands suffering stark dives in the amount households were able to save. The £135 – or 76.3 per cent – collapse in East Midlands saving left the average at only £42, the lowest of any region in the UK.

The survey also asked households whether they were in the mood to save – according to the poll 69 per cent of UK citizens were in the first quarter of 2013 – the same as the first quarters of both 2012 and 2011.

This goes in line with official figures, according to which the household saving ratio – having fallen steadily and seemingly inexorably from nearly nine per cent in 1997 into negative territory in the beginning of 2008 – rocketed back up above eight per cent by the end of 2009. The most recent figure was also close to eight per cent, reflecting the austere mood of the times.

Amongst the reasons given for saving, leaving money aside for a rainy day was most popular, cited by 71 per cent, followed by saving for a holiday and saving to pay household bills.