Savings ratio reaches four-year peak

The UK savings ratio – the proportion of disposable income that is saved rather than spent in households – hit a four-year high of six per cent in the first quarter of this year, Halifax reports.

Using data from the Office of National Statistics, the bank found that total household saving totalled around £12.9 billion in this period and over the entire year this sum was calculated at £44.1 billion.

Figures for the UK savings ratio calculation began to be collected in 1963 and since then the level has varied greatly, from a peak of 14.1 per cent in 1979 to a trough of 3.1 per cent in 2004.

And although the proportion measured at the beginning of 2006 was the highest since the end of 2001, it is still below the overall average of 7.8 per cent that has been measured since 1963.

“The good news is that household savings are on a steady trend upwards,” said Peter Jackson, head of savings at Halifax.

“Longer term, the UK needs higher levels of savings to fund the retirement plans of an ageing population. Recent increases in savings, although relatively small, are a step in the right direction.”

Halifax offers a regular saver account with a fixed annual rate of seven per cent for customers who save between £25 and £250 per month.