Consumers will continue to save for rainy day and housing
The Building Societies Association comments on last week's decision by the Monetary Policy Committee to hold the Bank Base Rate at 0.25%
It was a relief to many, both savers and savings providers alike, that the Monetary Policy Committee decided last week to hold the Bank Base Rate at 0.25%. Although the Bank has now said it won’t reduce rates again this year, if the outlook worsens this rate could fall again. The BSA commissioned Ipsos MORI to survey a group of 2,256 adults¹ across the UK to investigate their savings intentions over the next 12 months.
The results show that despite an interest rate environment which has favoured borrowers since May 2009, many consumers are building up their cash savings:
- 30% say that they plan to save a little or a lot more over the next year.
- 9% say that they plan to save a little or a lot less over the same period.
- 46% say that their savings behaviour won’t change – the 32% of this group who do save will continue to do so and the 14% who say they don’t save – won’t start.
Commenting, Robin Fieth, BSA, Chief Executive said:
“One of the policy objectives of looser monetary policy has been to encourage consumer spending. But, faced with uncertainty and high profile stories of slowing growth and weakening employment prospects, our survey suggests that consumers are feeling the need to increase their rainy day savings. Societies are on the side of savers, sensitive to what they are trying to achieve.
“When you save for a rainy day rather than for income, interest rates become less important. More important is the feeling that you have something put aside in a safe place should you need it. This survey clearly shows that for many, concern about what has or may happen to their income; rising bills; or the drive to save a deposit to buy a home of their own, supersedes spending.”
