There are different data points when it comes to the savings rate in the UK, but most of them (if not all) show that the rate of savings fell to a record low in 2018. Combine that with a record amount of unsecured debt outstanding. Those two factors do not bode well for the country, especially if Brexit has “no deal” and the economy slips like many experts say will happen.
One of the views of savings rate is the amount of money held at banks in the UK. UK Finance data shows that the amount is £838.3bn in January 2019, which is a small increase from 2017. In fact, if you consider 66m people in the UK, then that means the average person only saved £50 over the last 12 months. This is barely to feed a person for a week.
The Office of National Statistics reports just as bad data when it comes to savings. They show that savings in 2018 were hovering around 2.5 percent of household income. So for every £100 in wages, £2.5 was saved. This is a slightly different view than the UK Finance Data as it considers all forms of savings, including banks, investments, pensions, and anything else.
Compare this to past data from the Office of National Statistics. The savings rate in the UK in the 1990 was around 13% over the course of the decade. Then, in the early 2000s, the savings rate was around 6 to 7%. Since then, and into 2018, the average family has saved only a small amount of their income…under 5%. Savings have been going down for years as the consumerism in the UK has taken off.
Another red flag is that savings are going down at the same time as debt going up. As noted, 2018 was a bad year for families who tried to save money with the amounts at a record low. But it was even worse for debt, in particular credit card debt and other consumer loans. The combination id deadly. Here are some of the stats.
- Credit card debt is at a record high of £15,400 per borrower.
- Unsecured debt (student loans, car payment, payday loans, credit card, etc.) as a share of household income is now at 30%+, which is a record high. The higher the percentage the worse for families.
Finances are not in good shape as 2018 came to a close. More families are struggling to pay the bills with flattish wages and increasing inflation. Since they are struggling to pay living expenses, many are turning to credit cards and other borrowing to make ends meet…thus record high of unsecured debt. If a financial emergency come sup, or say loss of wages, it can drive more people into poverty, homelessness, and other struggles.
All through this site we have information on welfare programs, charities, grants for paying bills, and more. There are also topics on how to save money in the UK, which can also help the average household build up their saving and investment accounts. If steps are taking, the 2018 year could be the low point when it comes to savings rates.