Savings slow while debts increase

7 July 2008

New research has found borrowing increased in the first quarter of this year, while savings dropped by £11 billion.

Unbiased.co.uk`s report states non-mortgage loans rose to a total of £22 billion in the first three months of 2008 – an increase of £13 billion in twelve months.

Meanwhile, the amount saved decreased to £32.7 billion over the same period.

The research indicates a growing "Savings Brake" – the difference between savings and debt. In the first quarter of 2008, British consumers borrowed 69 pence for every pound saved, compared to a "Savings Brake" of 29 pence in the first quarter of 2007.

David Elms, chief executive at Unbiased.co.uk, urged consumers to "take control" of their finances to avoid unaffordable debt.

"Consumers are playing double jeopardy - not only increasing the amount they are borrowing, but also reducing the amount they are saving," he said.

Affordable credit is also hard to find due to lenders suffering the credit crunch, Mr Elms added.

Unbiased.co.uk – a non-profit organisation promoting independent financial advice – is campaigning for British consumers to join the "Savings Revolution" to manage finances and prepare for the future.

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Gregory Pennington is a member of DEMSA whose code of conduct is approved by the Office of Fair Trading.