Finance / Average household savings 'worth four times more than in 1975'

Average household savings 'worth four times more than in 1975'

The average UK household has around four times the level of savings that the typical family had 40 years ago in real terms, a report has found.

money (PA)

The value per household – including deposit savings, pensions and shares – has increased by 294%, from £36,989 in 1975 to £145,566 today, Lloyds Bank said.

The total value of UK household savings stands at about £4.1 trillion, compared with £744 billion in 1975 in today’s prices. The number of UK households has grown by 40% over the period, Lloyds said.

The proportion of disposable income that households put away in savings averaged 13% in the 20 years to 1995 against a backdrop of relatively high interest rates, the report said.

This level of savings declined during the noughties, fuelled by high levels of consumer spending and borrowing. The savings ratio fell to 5.5% in 2008, but rebounded a year later to reach 9.3%. Between 2005 and 2015, the average household savings ratio averaged 7.49%.

The report said the popularity of tax-efficient Isas has helped to push levels of deposit savings higher, while over the last 40 years, the value of pensions has grown by 7% a year on average – faster than any other form of savings.

But the value of shares held by households this year is about a third (32%) below a 40-year peak in 1999, around the time prices in dot.com shares collapsed.

There are still “considerable differences” in the levels of savings households hold today, Lloyds said. More than one in three (36%) have no savings, including deposits or investments, and 13% hold savings and investments of less than £1,500 in value.

Philip Robinson, savings director at Lloyds Bank, said: “The UK savings market has seen a dramatic shift over the last 40 years, with increased retail competition, the rise of digital banking and a greater emphasis on private pensions and ‘tax free’ savings.

“Despite witnessing three recessions during the period, in addition to rising levels of consumer spending and borrowing, real household savings have grown annually by an average of over 4% and we would expect this to continue over the next few years.”

The research used data from the Office for National Statistics (ONS) and the Bank of England.


Photo from Gareth Fuller / PA Wire

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