7th August 2015
Britons are constantly being told to save more but the average household has increased the amount they have in saving four-fold in the past 40 years.
Research by Lloyds shows the average savings per household has increased from £36,989 in 1975 to £145,566 today – an increase of 294%.
UK savings now stand at an estimated £4.1 trillion, compared to £744 billion in 1975, in today’s prices.
However, with the number of households growing 40% over the same period, this increase is not as dramatic as first thought. Since 1975, real household income per head has risen 130%.
There are considerable difference in the value of savings, with 36% of households having no savings and 13% having savings or investments of less than £1,500.
The amount saved by families has also fallen. The proportion of income saved by households averaged 13% in the 20 years to 1995 against a backdrop of high interest rates, particularly in 1979 and 1992.
The savings ratio peaked at 16.4% in 1992 but has declined rapidly during the ‘noughties’ due to consumer spending and borrowing.
Lower interest rates and greater economic stability pre-2007 also meant families did not see the need to hold savings. The savings ratio feel to an annual average low of 5.5% in 2008 and rebounded a year later reaching 9.3%.
In 2015, the savings ratio was just 6% and while deposit savings continue to grow, it has fallen as a proportion of total savings in the past 40 years.
Lloyds Bank savings director Philip Robinson said: ‘The UK savings market has seen a dramatic shift over the last 40 years, with increased retail competition, the rise of digital banking and a greater emphasis on private pensions and ‘tax-free’ savings.
‘Despite witnessing three recession during the period, in addition to rising levels of consumer spending and borrowing, real household savings have grown annually by an average of over 4% and we would expect this to continue over the next few years.’