Is the UK Now a Land of Borrowers?

UK households are most likely borrowers rather than savers for the first time since the Office for National Statistics (ONS) started to collect data in 1987. In addition, it has been shown that savings levels are the lowest they have been since 1963.

Low interest rates combined with budget pressures on families have been suggested as some of the causes of the statistic.

A household is defined as a net borrower if the amount of debt that is building up exceeds the the amount they are depositing in bank accounts, for example.

Most households in the UK have now satisfied this definition for over a year.

The annual rate of savings has now joined the quarterly rate as a record low, with the Office for National Statistics revealing that the amount that households are saving is 4.9% of their disposable income. The previous lowest figure before 2017 was 5.2%, set in 1971.

It's possible that savers may be waiting for a rise in interest rates before taking out a new savings account, or it could be due to the increased pressure on household earnings.

Debt charity StepChange's spokesperson said that:

"Far from being a nation of savers, we're now a nation of borrowers. If we could shift that balance a bit, especially for lower income households, we could improve the financial wellbeing of many households and prevent many experiencing problem debt."

According to the ONS, UK economic growth was 0.4% in the last three months of last year, reducing from 0.5% in third quarter, largely due to a fall in the spending by consumers.

The overall year's growth was revised up however. from 1.7% to 1.8%.

Westminster Wealth Management can assist in helping you to navigate your financial future, and expert advice is valuable in complicated times just as much as in simple ones. Contact us today.

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