Savings levels soar
The average balance in an easy access savings account soared by 18 per cent to £1,858 in the first quarter of 2012, according to the ING Direct Consumer Savings Monitor.
This is the highest level since the second quarter of 2010, when the typical balance in an easy access account was £2,050.
It also represents the first consecutive quarterly rise in savings since 2009.
The jump in savings may seem surprising, considering that the economy fell back into recession in the first quarter and unemployment figures remain high, but ING Direct suggest it is largely due to payment protection insurance compensation payouts starting to kick in.
Two million people are expected to receive payouts of around £2,600 this year and ING Direct has estimated that one third of the payments will be placed into savings accounts.
ING Direct suggests that the recent slump on the high street is also linked to the savings increase.
Richard Doe, ING Direct chief executive, said: “Six months of relatively restrained spending may not have helped the economy in terms of GDP growth, but it has allowed Britons to deliver on their determination to restore their savings.”
The report highlights consumers’ determination to reduce their debts despite the difficult economic climate.
Levels of unsecured debt, including credit cards, loans and overdrafts, increased by just £18 to an average of £2,242 in the first quarter.
Over 40 per cent of the respondents to ING Direct’s survey said they would use their PPI compensation to reduce their debts.
Meanwhile, research by investment specialist Skandia suggests that people need more savings now than they did two years ago, in order to consider themselves happy.
In 2010, 82 per cent of people said savings of up to £5,000 would make them happy, but in a survey carried out last month just 64 per cent said they would be happy with this amount of savings.
In 2010 92 per cent said savings of over £10,000 would give them peace of mind, but in 2012, 91 per cent said they would need savings of over £50,000 to give them peace of mind.