Fewer people made regular contributions to their savings last month than at any time since August last year, according to the latest Nationwide UK (Ireland) Savings Index.
October saw a large fall-off in the number of regular savers as dissatisfaction with government policy grew and people increasingly felt it was a bad time to put money away.
The overall index, which measures consumers’ sentiment towards saving, decreased to 94 in October, down 20 points on last month. The decrease was driven by falls in the report’s two sub-indices, which measure consumer sentiment towards their own saving behaviour and towards the wider savings environment, respectively.
Nationwide UK (Ireland) managing director Brendan Synnott said: “This month it appears that the planned introduction of water charges which has dominated the news recently is reflected in negative sentiment on government policy towards saving, which in turn has driven the decline in the savings index.”
The over-50s showed a greater reluctance to save than the wider community, with more than 50% not savings at all last month; up from 43% in September. Across the spectrum, 32% of people saved regularly, 5% less than the previous month.
The main driver of decline in sentiment towards the saving environment is the negative consumer response to government policy, with 65% of people expressing the view that it discourages saving, an increase from 57% last month. Just 6% of savers believe government policy encourages saving.
Mr Synott said: “It is also concerning that preference to spend, which had been at or above 10% during the year, has fallen back to 9% this month despite economic indicators which continue to improve. This may suggest that the water charges issue could have a negative impact on overall consumer confidence until such time as clarity is provided on the new structure and extent of the charges to be introduced.”
Paying down debt remained the preferred use of any additional money after everyday needs are met — down slightly from 48% to 45% — while saving the additional funds (39%); increasing spending (9%); and using it to invest (7%) were the other uses identified.
The proportion of people who believe now is a bad time to save rose in October to 40% from 36% last month.
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