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Are you dipping into your savings?

A number of recent surveys have suggested that more and more people in the UK are now being forced to dip into their savings to cover their traditional monthly living expenses. This is a worrying sign for the UK economy because ultimately any reduction in disposable income, i.e. income left after living expenses have been deducted, means there is less to invest in the UK economy which will impact business figures, profitability as well as eventually employment.

There are a number of events in a long chain which can both kickstart and effectively kill the UK economy over a relatively short period of time. One of the main issues is disposable income which is becoming more and more of a rarity in the UK as consumers struggle to meet their everyday costs of living. When you also take into account the fact inflation is running well ahead of wage inflation and effectively the pound in your pocket is reducing in spending power on a daily basis, the situation does look very bleak.

However, it is also worth mentioning that if you are obtaining minimal interest rates on your savings and you have debts which are attracting a higher rate of interest then in many instances it may make sense to pay down your debt in the short-term and reduce your interest payments.

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