Irish consumers believe now is a bad time to save, says survey

Irish consumers believe now is a bad time to save, says survey

The Nationwide UK (Ireland)/ ESRI Savings Index, which measures overall sentiment towards saving, decreased to 95 in June, a seven-point decrease versus the previous month.

The Savings Environment sub-index, which gauges opinion on economic conditions and the impact of government policy on saving decreased to 80 from 95 last month.

This decline can be attributed to the proportion of people who think the economic situation is worsening for savers, with 43% of people saying that now is a bad time to save.

This sentiment is particularly felt among the over 50’s with 46% outlining this view, a seven-percentage point increase from last month.

The proportion of people who believe that now is a good time to save fell to 26% in June compared to 33% last month.

The proportion of people who view Government policy as discouraging to saving increased further in June to 65% which compares to 57% a year ago.

The Savings Attitude sub-index, which asks people about their saving behaviour and how they feel about the amount they save remained unchanged at 109, however the three-month moving average increased slightly to 108 from 106 last month.

In June, the proportion of people saving regularly increased to 35% from 33% last month and 32% a year ago.

In addition, the proportion of people who say they are happy with the amount they are saving increased to 17% in June compared to 14% a year ago.

This increase is driven by those aged under 50 with 17% in this group saying they are happy with the amount they are saving, an increase from 12% a year ago.

Looking ahead, 94% of people expect to be able to save the same amount or more in six months time, a 10 percentage point increase from June 2013.

When asked about their preference as to how they might allocate any money over and above their everyday needs; 34% said they would save the money, a decline from 36% last month and 13% said they would spend it, an increase from 10% last month.

However, there has also been an increase in the amount people are saving each month with 53% of people saying on average, they save more than €100 a month compared to 46% a year ago.

Commenting on the Index, Brendan Synnott Managing Director of Nationwide UK (Ireland) said: “The decline in the Savings Index this month is not unexpected.

“While personal attitudes towards savings remain strong with more people saving regularly, issues in the wider environment, like low interest rates and a high rate of tax on interest earned, are driving increased negative sentiment.

“As the financial health of the economy improves and fear of budget cuts, tax increases and further economic shocks recede, we are seeing that more people are saving with specific purchases in mind as opposed to saving with a precautionary motive.

“We are also seeing an increase in preference to spend any spare funds available which may translate to an increase in consumer spending. Overall, these are positive trends in re-establishing a normal saving and spending pattern in the economy.”

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