One in four people do not save in the UK

One in four people in the UK do not save any of their income at all, a study released today by the Post Office reveals.

Launched in 1861 by Lord Palmerston's government, the Post Office Savings Bank was designed to give ordinary people a chance to save.

But levels of saving are now lower than they were during the last century.

During the first year of the scheme the average deposit made was £9.45, one fifth of a skilled workers annual salary; the equivalent of £445.753 today.

However, savers are now putting aside just £172.69 a year from current disposable incomes.

And, worryingly, 24 per cent of people said they do not save at all, with a further third (32 per cent) saving only infrequently.

A lack of spare money was cited as the principal reason for failing to save by 71 per cent of those questioned.

Around 27 per cent of those could not afford to save as they had too many debts to pay off, while 17 per cent said they spent all their money before they could save it.

According to Post Office research the savings ratio – the proportion of post-tax income saved rather than spent- has varied over the years.

The ratio peaked in 1980, when 12.4 per cent was saved.

This is compared to the period between 1946 and 1955 during the post-WWII slump, when the ratio entered positive territory once, at 0.3 per cent during the coronation of Queen Elizabeth.

Today the ratio stands at 2.1 per cent, the lowest level since 1959.

"With over 145 years experience, the Post Office has seen many savings trends, but it is worrying to see we are now saving less than forty years ago – as little as 21 pence in every £10," commented Richard Norman, head of savings at the Post Office.