News Desk

COVID-19 prompts increase in savings habits

More people in the UK have picked up the savings habit, despite interest rates falling to record lows in recent months.

Figures from the Office for National Statistics (ONS) show households are putting more of their disposable income into savings than at any time in the last four years.

The so-called savings ratio showed UK households saved 8.6% of their disposable income in January-March 2020, up 2% on the previous quarter.

In terms of the year-on-year picture, 4.1% of UK households saved for a rainy day in Q1 2019 - representing annual savings ratio growth of 4.5%.

The Q1 2020 shift in savings habits came as households reduced their total spending, fuelled by the UK going into lockdown in March 2020.

That resulted in most residents working from home, saving money that may have been spent on commuting, food or drinks.

Most savers will be seeing little return for their efforts, with the Bank of England's base rate of interest currently offering just 0.1% growth.

Rachel Springall, finance expert at Moneyfacts, said:

"Due to the pandemic, it is more important than ever for savers to build up emergency cash to dip into should they run into any financial difficulties."

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