Savers withdraw over £23 billion from savings accounts
03/12/2013
The Bank of England has revealed that £23 billion has been withdrawn from long-term savings accounts over the last 12 months, in what is the biggest drop in savings for almost 40 years.
The shortfall, which accounts for almost £900 for every household in the country has either been spent or moved to the more accessible current account and has been attributed as a reaction to low interest rates which in some cases are little over 1 per cent.
In truth, the withdrawals could have been a factor that helped to fuel Britain’s economic recovery, due to some cash being spent on consumer goods. The figures show the opposite of what occurred during the economic crisis where consumers were more likely to keep hold of any spare cash, as long-term savings are down 4.7 per cent to October 2013, which is the biggest fall since the 1970’s according to Sky News.
However, despite this trend apparently aiding in the acceleration of the UK’s economic recovery, some experts have raised concerns that the figures could outline instability in the economic recovery. Furthermore, these experts have urged the Chancellor to encourage future long-term saving in his Autumn statement in order to add sustainability and encourage long-term growth the the UK economy.
In an interview with the Telegraph, Ros Altmann, a former Dowining Street adviser described the figures as “desperately worrying,” and said the reason people have stopped their long-term savings is because policies have meant “you would be a mug to save.”
Altmann went on to say “No economy can thrive in the long run without people saving. You can’t run it on borrowing and debt, you need to save and invest for the future. If you just withdraw money and spend you are talking about a recipe for long-term economic decline.”
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