Savings crisis hits Britain

Published:

23/03/2009

Topic:

Press Release,Savings

ISAs have lost momentum as a cash strapped nation has struggled to make any savings at all.

• A quarter of people have no savings
• Over a third of the nation has less in savings now than two years ago
• Government must raise cash ISA limit
  

Almost a quarter of people (24 per cent) say they didn't have savings two years ago and they still don't. More than a third of people (36 per cent) say they have less money in savings now than two years ago, according to a poll commissioned by price comparison site moneysupermarket.com.¹

Just six per cent have saved enough in the past two years to potentially utilise their full ISA allowance of £6,600. Of those who have saved within an ISA, their average investment in the past two years has been less than half of the allowance - at just over £3,100.

Kevin Mountford, head of banking at moneysupermarket.com, said: "A quarter of people have no money at all put aside, which shows just how serious rising unemployment will become over the coming year.

"Those with savings would be wise to make use of their cash ISA allowance. Most accounts allow you to withdraw cash without any loss of interest or tax implications should you need money at a later stage.

"Diligent savers can put away a tidy sum if they regularly invest in an ISA - especially now the annual allowance has been increased to £3,600. The Government should also look to raise this limit further in the upcoming budget.

"Someone investing their full cash ISA allowance for each of the past 10 years would have around £41,600 now, of which £11,000 would have been interest alone. This would leave them £2,700 better off than basic rate taxpayers saving the same amount outside an ISA.²

"It's not too late for anyone with spare cash to put some away in an ISA. People have until the end of the tax year - April 5 - to squirrel away up to £3,600.

"Those who have already invested can put some more money aside from April 6 onwards."

- Ends -

Notes to editors:
1 - Opinium Research carried out a poll of 1,994 British adults between March 3 and 5. Results have been weighted to nationally representative criteria.

2 - Yearly rates used: 1999 - 5.85%, 2000 - 7.25%, 2001 - 5.79%, 2002 - 5%, 2003 - 4.35%, 2004 - 4.6%, 2005 - 5.4%, 2006 - 5.2%, 2007 - 6.5%, 2008 - 6.5%
Deposits: £30,600
ISA interest: £11,012
Basic rate taxpayer interest on non-ISA savings accounts: £8,314
Higher-rate taxpayer interest on non-ISAs: £6,169 (over £4,800 less).

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