Households’ weekly savings to fall by £1.4bn during 2022
Brits expected to save 57% less per week this year compared with 2021
Saving levels are forecast to slowly recover later this year as inflation begins to ease
However, nearly a quarter of Brits do not expect to be able to save anything over the next 12 months
Households in Britain will save on average £1.4bn less each week this year compared with 2021 as take-home pay fails to keep pace with rising inflation.
A study by Scottish Friendly and the Centre for Economics and Business Research (Cebr) estimates that households will save on average £42 a week in Q3 and £45 a week in Q4.
Over the whole of 2022, it’s predicted Brits’ average weekly saving will be £39 or £1.1bn in total.
In 2021, when spending opportunities were at times restricted, Brits saved an average of £89 a week which is equivalent to £2.5bn and more than double (128%) the equivalent figure this year.
Until the end of March 2022, the average amount saved per week has been falling every quarter since Q1 2021 when it peaked at £152.
However, it is forecast that in Q3 and Q4 saving levels will begin to recover with higher wage growth expected.
These figures are broadly in line with pre-pandemic saving levels – households saved an average of £43 in Q3 and Q4 2019.
A survey of more than 2,000 UK adults conducted as part of the study reveals nearly half (49%) of respondents expect they will have to draw upon savings or investments to boost their income over the coming year.
Meanwhile, more than four in ten (42%) expect they will have to borrow money to meet rising living costs.
Brits’ ability to save over the next 12 months has also been severely impacted by the rising cost of living.
Nearly a quarter (24%) of respondents do not expect to be able to save at all while more than a third (36%) anticipate saving less. Only 17% anticipate being able to save more.
Kevin Brown, savings specialist at Scottish Friendly, comments:
Household savings are expected to slowly begin to recover in the second half of this year once inflation has reached its peak.
For now, inflation is still on its way up and set to reach double digits which makes life difficult for consumers particularly when interest rates remain so low.
It’s a dreadful combination for households as maintaining normal spending habits becomes harder and harder, while their ability to save is also severely restricted.
As a result, living standards are falling to their lowest levels for a generation and many families are being forced to borrow or draw down on their savings and investments.
Households should be preparing for the possibility of worse to come but every cloud has a silver lining and eventually the situation will improve.
Our expectation is that by the end of the year, inflationary pressures will begin to ease and with the potential for increased wage rises, life will hopefully become a little easier for those many families currently feeling hard-pressed.
Estimate of weekly savings for average UK household, Q2 2018 – Q4 2022