Savers show flash of optimism

The Nationwide Savings Index improves slightly as consumers feel brighter about the economy.

The UK saving situation is still challenging as fewer people are making the decision to save in the current climate. The slight increase to the Savings Index may be a reaction to the no-change decision in April's MPC meeting as savers will have seen their interest rates remain stable. The results were collated before May's MPC meeting, therefore it will be interesting to see if this positive trend continues next month when consumers factor this in. Similarly, a further positive change may be seen if the Chancellor's Budget announcement about ISAs has had an impact on consumer sentiment.

Despite the flash of optimisim, the savings situation remains gloomy.

The April Savings Index shows that:

Just 56% of consumers think saving is important;

Less than half (47%) of consumers save regularly;

A quarter (25%) of consumers save nothing at all;

59% of people save less than they think they need to, while only 28% feel that they save the right amount;

24% of consumers think they'll be saving less in six months time, then they do now;

Just 16% of people think now is a good time to save;

Over half (56%) of consumers think government policy discourage them from saving.

Lee Raybould, head of savings says:"Despite the modest improvement of two points in the Savings Index this month, the savings environment is still perceived as unfavourable by consumers. The large share of respondents saying that government policy discourages them from saving may reflect disappointment with the very low level of interest rates currently prevailing. However, a comparison of current savings rates with the higher rates seen last year only tells part of the story, as it does not take into account the recent sharp falls in the rate of retail price inflation. Last summer, when inflation was running at its highest point for a number of years, the real return on fixed rate savings bonds was actually lower than it is now, showing that it does still pay to save. So far, however, this improvement in the real return on savings has yet to feed into public perceptions of the savings environment."