FOR MANY Brits, savings simply aren’t a priority. In fact, earlier this year, research revealed that a quarter of British adults had no savings.
Furthermore, savings fell as a share of our income from almost 12 per cent at the start of 2010, to under five per cent at the beginning of 2016. Indeed, another bit of research conducted back in 2016 found that four in 10 working-age people in the UK lacked a savings buffer, with under £100 of savings available to them at any time.
When it comes to borrowing money, it seems that we’re not doing too well either. According to the a report released this year by the Office for National Statistics (ONS), UK households spent or invested on average £900 more than they received in income in 2017, meaning that outgoings surpassed income for the first time in almost 30 years. In total, this comes to nearly £25bn. Worryingly, the ONS say that even in the run-up to the financial crisis, when 100 per cent mortgages were available, the country did not reach a point where the average household was a net borrower.
What’s more, according to The Money Charity, total net lending to individuals and housing associations increased by £46bn in the year to July 2018. This took the total net debt per household to £58,658. Consumer credit also increased by 5.9 per cent over the year, representing an increase of £227.94 per adult.
Meanwhile, the average real wage is lower now than it was 10 years ago.
And it seems that people aren’t just borrowing money at short notice to pay for unforeseen expenses. According to online loan broker Cashlady, ‘paying bills’ appears as the number two reason as to why millions of people apply for high-cost short-term credit each year across the UK.
On the bright side, unemployment levels fell to four per cent in 2018, with record low youth unemployment.
However, with continuing uncertainty surrounding Brexit, the outlook for 2019 remains unsure. Only a few days ago, the Bank of England warned that food prices could increase by 10 per cent in the event of a no-deal Brexit.
Moreover, it said that this no-deal scenario could see the UK sink into a recession.
However, these are simply scenarios which illustrate what could happen. Besides, even if the Prime Minister’s Brexit deal does not get through Parliament next week, a no-deal outcome is still not the only possible result. In fact, far from it. It seems that anything could happen.
But what does this mean for how we spend and how we save? What happens in the next few weeks and months will no doubt have a huge effect on how all of us choose to use our cash over the next year.
However, if the trends seen since the financial crisis continue, it seems that for many of us, saving will be near the bottom of our list.