Savings CRISIS: Household rainy-day funds PLUNGE to record lows
BRITISH households have the lowest ever levels of savings, amid rock-bottom interest rates and surging inflation.
Families continued to spend emergency reserves and rainy day funds pushing the savings ratio down to just 1.7 per cent, according to the latest data from the Office for National Statistics (ONS).
Savings have been steadily declining since the middle of 2015 but dropped sharply at the start of this year, the data showed.
Inflation has this year surged to 2.9 per cent, its highest levels in around four years.
The mirrored fall in savings indicates that families are likely to be using spare funds to pay for the rising cost of living, which now outpaces wage increases.
Related articles
There is also little incentive to save after the Bank of England cut core interest rates to 0.25 per cent from 0.5 per cent last summer.
It means that the value of cash kept in standard savings accounts is in effect falling, which could also discourage households from keeping hold of money.
Families without a financial buffer could struggle to cope in an economic downturn or in the event of an unexpected event such as a job loss.
It comes after the Bank of England raised the alarm over the rising level of debt among households.
Related articles
Martin Lewis shares his top tips for children's savings
TUC General Secretary Frances O’Grady said: “These figures make for grim reading.
"People raiding their piggy banks is bad news for working people and the economy.
“But with wages falling as living costs rise, many families are having to run down their savings or rely on credit cards and loans to get through the month.
“With household debt now at crisis levels, we urgently need to create better paid jobs."
