Nationwide Savings Index at highest since December 2008

Following its resurgence in the previous month, the Nationwide Savings Index rose by another three points to reach its highest level since December 2008.

The rise in the Savings Index was as a result of the improvement in the savings environment.

The Savings Environment Index increased by eight points to 85 - its highest level since December 2008.

Fewer people are not saving at all (22%, a decrease of 2%).

Andy Hutchinson, head of savings at Nationwide, says: "The sharp rise in the Savings Environment Index could have been as a result of the ISA changes for the over-50s, which came into effect in early October. We know eligible savers have reacted positively to the increased annual ISA limit as our exclusive 50+ three year Fixed Rate ISA Bond has attracted more savings than we had expected."

Savings environment picks up, but there is room for more improvement

The situation has improved, but there are still more people (43%, a decrease of 5%) who believe the Government discourages people to save than encourages (20%, an increase of 3%).

Andy Hutchinson says: "It's encouraging that the savings environment has improved somewhat and we fully welcome the recent ISA changes. However, we believe more could be done, such as increasing the cash ISA limit to match that of stocks and shares and ensuring the annual limit is linked to inflation. By doing so, more people may believe government policy encourages them to save."

Despite some optimism, caution remains

Both the Importance of Savings and Future Savings Index indices fell slightly, though the latter is comfortably higher than any other month, bar September 2009.

More people (20%, an increase of 3%) believe they will be saving less in six months' time than they do now.

Andy Hutchinson, head of savings at Nationwide, says: "Despite there being some evidence to believe that overall confidence in the UK economy is returning, caution should remain. Over the first eight months of 2009, growth in household savings is down by 65% compared to the same period in 2008. While it is likely that households are saving elsewhere, such as equity investments or choosing to pay down debt, households are still finding it difficult to save in these challenging market conditions."

"Furthermore, recent economic data suggests that the UK is in its longest recession since records began, so any obstacles to market recovery could have a negative impact on next month's savings indices, particularly Future Savings and Savings Environment. With the difficult economic environment ever present, saving for a rainy day remains important."