Shift from borrowing to saving essential

The government must start encouraging the UK to save money, the Association of Independent Financial Advisers (AIFA) said yesterday.

Chris Cummings, AIFA director-general, said it is vital that the government’s upcoming budget provides incentives for saving.

With personal debt now above £1.4 trillion, a sea-change in the UK’s approach to personal finance is ‘essential’, Cummings said, and the government must take leadership to encourage a shift towards saving.

He suggested increased allowances for individual savings accounts (ISAs) and the introduction of a new tax-free savings account for first time buyers.

“We would propose a review of tax incentivised savings regimes, an increase in ISA allowances and the encouragement of younger people to save for their future through the introduction of a Tax Free Savings account,” Cummings said.

He also stressed the need for consumers to have access to good financial advice during the recession.

Chancellor of the Exchequer Alistair Daring is expected to announce the 2009-2010 budget on 22 April.

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