People focus on paying off debts

THE pressure to pay off debts meant fewer people were saving last month.

According to the Nationwide UK (Ireland)/ESRI savings index two-thirds of people surveyed would use extra money to pay off debts, including mortgages.

This is well up on the August figure and the highest recorded since the index started in April.

The index dropped by 16 points in September, driven by negative consumer sentiment towards economic conditions and an emerging preference to use any spare cash to repay debts.

This is the first decrease in the savings index since June. Last month 47% of people believed that it was a bad time to save compared with 40% in August, mainly because of the economic climate. The percentage of people saving less than they think they should jumped from 61% in August to 64% in September, according to the findings.

Managing director of Nationwide UK (Ireland) Brendan Synnott said: “The events of the past month appear to have had a profound impact on the perceptions of consumers. Normally, a deterioration in economic conditions leads to an upward trend in the Savings Index. However, this month’s negative results throughout the index indicate that people are turning their attention beyond savings towards debt repayment and pensions.”

Mr Synnott said the results highlight the need for leadership and a credible plan to demonstrate that the country’s public finances are manageable so that consumers regain the confidence to return to normal spending and savings patterns.

The index showed that the percentage of people who think government policy encourages people to save fell from 11% in August to 8% in September.

Even though a majority of consumers said they are saving less than they should, 59% think they will be saving the same amount in six months’ time.

The index measures 500 people’s responses to questions on their attitudes and behaviour towards saving.