Savings Index Experiences Sharp Decline in October

Savings Index falls to lowest level in 10 months

The Nationwide UK (Ireland) / ESRI Savings Index, which measures overall sentiment towards saving, decreased to 94 in October, down 20 points on last month.

The overall decrease is driven by both the Savings Environment sub-index, which decreased by 21 points, and the Savings Attitude index, decreasing by 19 points in October.

The Savings Attitude sub-index, which asks respondents about their saving behaviour and how they feel about the amount they save, decreased to 107 in October from 126 in September.

The proportion of people saving regularly decreased to 32% from 37% last month, the lowest level recorded since August 2013. The decline is most apparent among the over 50’s with 51% of these groups not saving at all in October, up from 43% in September. At the same time, 62% of people are dissatisfied with the amount they are saving, an increase from 56% last month. This increase in dissatisfaction is reflected across younger and older age groups.

However, optimism for the future remains strong with 94% of people saying that in six months’ time, they expect to be able to save the same amount or more than they do at present.

Meanwhile, the Savings Environment sub-index, which asks if people believe that the current period is a good time to save and whether they think government policy encourages people to save, fell to 81 in October from 102 in September.

The main driver of the decline in this sub-index is the negative consumer response to government policy with 65% of people expressing the view that it discourages saving, an increase from 57% last month. At the same time, there has been a decline in the proportion of people who think that government policy encourages saving, falling to 6% from 10% last month. This trend is reflected across all age groups, but is more strongly expressed by those aged over 50 with 69% of this age group expressing a negative view.

In addition, the proportion of people who believe now is a bad time to save increased in October to 40% from 36% last month.

When asked about their preference as to how they might allocate any money over and above their everyday needs, the proportion of people who said they would use the surplus to pay off debts, including their mortgage, fell to 45% from 48% in September. A further 9% said they would spend it, down from 11% last month it; 7% per cent said they would invest it, the same as last month. The proportion of people who would choose to save the money increased to 39% in October from 34% last month .