Brits are being forced to run down their pandemic-induced savings to maintain spending amid historically steep inflation, reveals fresh figures published today.
Pay is trailing behind the rate of price rises, meaning households are having to raid their war chests to maintain living standards.
Over one in two Brits have already drawn from their savings in response to the worsening cost of living crunch, according to research by the Centre for Economics and Business Research (CEBR) and Scottish Friendly.
Higher prices are eating into households’ room to set aside money each month, leading to Brits’ weekly savings contributions dropping 71 per cent over the last year to just £26 a week.
Consumers ramped up saving contributions during lockdown periods by diverting money that would have been on social activities and commuting to work.
The CEBR and Scottish Friendly estimate over the first three months of last year, households topped up their saving accounts by an average of £152 a week.
Contributions are expected to slump to just £26 a week in May and June.
The research underlines the scale of pressure households’ finances are under from what is already a 30-year high inflation rate of 6.2 per cent.
Experts warned saddling Brits with a heavier tax burden will heap on more economic misery.
“The 1.25 percentage point hike in national insurance contributions and the freezing of income tax bands couldn’t be happening at a worse time for families,” Kevin Brown, savings specialist at Scottish Friendly.
The tax burden is set to swell to its highest level since the late 1940s.