Save £2, borrow £1

Tuesday, 23 January 2007 12:00

For every £2 saved by UK residents almost £1 is borrowed, new figures reveal.

This is undermining the good work that has seen Britons save £32 billion in the third quarter of 2006, Unbiased.co.uk's latest Savings Brake report shows.

But between over the same period UK residents also borrowed 98 pence for every £2 they saved.

"Consumers are beginning to sit up and take notice of the increasing calls to save, however they are compromising these positive steps by continuing to borrow money to accommodate spending habits," said David Elms, chief executive of Unbiased.

"Until people take responsibility for their debt then the benefits of saving will be diminished."

Unbiased's figures show Britons borrowed just 18 pence per pound saved in the first three months of 2006, but this slipped to 54 pence per pound in second three months, before improving slightly to 49 pence in the third quarter.

"It is disappointing that consumer trends are failing to move in the right direction," said Mr Elms.

"When we reported on the first quarter of 2006 we saw that UK consumers were borrowing only 18 pence for every pound saved, and there was evidence of a net repayment of debt.

"However 2006 has seen consumers borrowing 54p and 49p for every pound saved throughout the second and third quarters respectively.

"This demonstrates that although people are recognising the need to save more they may not be budgeting to avoid taking on new debt."

However, there are signs things are improving.

In the last five years the July to September period has traditionally been when UK residents borrow more per pound saved than at any other time in the year.

The 2006 figures of 49 pence borrowed per pound saved are also lower than the figures have been in recent years, with more than double this borrowed in 2003 (128 pence per pound saved) and 2002 (102 pence borrowed per pound saved).

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