Fear of recession prompts increase in desire to save

An increasing number of people are looking to save their money following poorer-than-expected growth figures in Ireland leading to fears of the recession returning.

The number of people who want to save their money has jumped by 13%, according to the latest Nationwide UK (Ireland)/ESRI Savings Index.

Managing Director of Nationwide UK (Ireland) Brendan Synnott said that consumers were again looking to save money to get them through tougher economic times.

“It is possible that recently published negative GDP data for quarter one and subsequent downward revisions of overall economic growth in the economy for the year has re-focused consumer attention on the importance of saving; however it remains to be seen if this month’s result is the start of a new trend or a one-off.”

There were some positive movements in the monthly index which measures attitudes to savings. It found people’s attitude towards government policy has improved for the second month in a row. In July, 13% of people said government policy is encouraging saving, a rise from 8% the previous month and an all-time low of 5% in February.

There was a marginal increase in the percentage of individuals who were willing to spend surplus cash, rising a single percent to 11%. The vast majority of respondents still said they would use spare money to pay down debt (46%) with the remaining 37% choosing to save their excess money.

Mr Synnott said the popularity of saving was due to people fearing unexpected expenses.

“The most recent results are a departure from the trend seen since last November. In Jul 2013, the increase in the index suggests that consumers have absorbed the impact of the last budget plus the introduction of the property tax and are now thinking again about saving, most likely for unexpected expenses,” he said.