Pessimism creeping up for savers

Consumers are becoming increasingly pessimistic about their future ability to save.  This is according to new research from Nationwide Building Society, which shows that - in the second quarter of 2010 (Q2 2010) - 21% of consumers believed they will save less in six months' time than they currently do.   In the first quarter of 2010 (Q1 2010), the figure was just 18%, representing an increase of 3% points quarter-on-quarter.

Another concerning statistic from this research was that fewer consumers saved regularly in Q2 2010 (46%, down 3% points from Q1 2010), while more did not save at all (22%, up 2% points).  Furthermore, more consumers believed that they were currently saving less than they should do (62%, up 2% points).

In contrast, despite the increasing pessimism, savings balances for mutuals actually increased by £1.4 billion in the first five months of 2010.

Commenting on the research, Robin Bailey, Nationwide's savings and investments director, said: "It is unclear what the exact cause is for the increasing pessimism of savers, though it is consistent with recent data that shows the proportion of income saved in July 2010 fell, despite an actual increase in disposable income, as well as the fall in consumer confidence in recent months.  This fall in consumer confidence could reflect a general lack of confidence in the economy, meaning some people will feel they have less spare cash to save.  We know, for example, that around half of all consumers believe that it is a bad time to save given the current economic situation."

Fewer consumers believe the Government discourages them from saving

On the positive side, the General Election coincided with a boost in opinions about the Government policy regarding savings.  The proportion of consumers who believe that the Government discourages people from saving fell (39%, down 4% points).  Looking from a monthly perspective, just 33% of consumers in June 2010 felt that the Government discourages people from saving, representing the lowest figure since the Savings Index began.

Robin Bailey said: "The second quarter of 2010 saw not only the start of a coalition government but also an improvement in consumer sentiment towards whether government policy encourages them to save.  On one hand, this could be down to post-General Election optimism.  On the other hand, more consumers than ever before believe the Government neither encourages nor discourages them to save, suggesting that consumers are unsure how policy from the new government will affect them.  Either way, it will be interesting to see what impact the austerity Budget will have on the Savings Index going forward."

Nationwide: saving for a rainy day remains important despite index slide

The Importance of Savings Index slid 12 points in Q2 2010

Robin Bailey said: "It remains important to have a savings safety net in place to cover unforeseen events.  Although the low interest rate environment continues to be a feature of the savings market, good deals are available.  This is especially the case if people are willing to lock in part of their savings for the medium to long term."