'A nation of savers'? Average UK savings remain miles behind Chinese

The Bank of England recently reiterated an old adage of the UK being 'a nation of savers'. But how true is that remark? New research investigates.

The proportion of disposable income saved by UK households has been falling over the past decade, but recovered during the recession to 7%, according to a report commissioned by Lloyds.

Though the cost of living has soared above the rates available on most savings accounts, the squeeze in consumer credit and fears about job security have reprised savings as a priority. The average UK household has an average of £5,000 in savings and investments.

This ratio remains less than Germany, however, which has a consistent savings ratio of 10%, which translates into savings of over €10,000 (c. £8,600) per household.

And it is considerably less than China, whose typical urban households save almost half of all disposable income. The Chinese savings ratio has risen from 27% in 2001 to 47% last year - an average equivalent of c. £19,300.

This is largely attributed to the lack of social security provision in China which drives the necessity to save. According to the report, only 3% of Chinese adults have no form of savings compared to 11% in the UK.

The diversity of savings and investments held by Chinese savers is also notable compared with Europe. While roughly 90% have savings accounts, close to 60% hold savings at home, with local organisations, and through stocks or long-term investments – a considerably higher percentage than in either the UK or Germany.

A History of Savers

The historical precedent for the UK is generally positive, notes the Bank of England. Retail savings deposits show an underlying pattern of growth since the mid-twentieth century. This has stalled more recently, however, with the onset of the Eurozone crisis and higher inflation in the UK.

Brits have shown signs of financial diligence in response to the crisis. Some 70% of families now construct a weekly budget compared to 56% before the recession, while 62% of UK adults say that they have switched banks to get better rates on their savings accounts – a figure which still pales in comparison to the 82% of Chinese who say they have switched to ensure the best rates on their high savings volumes.

Brits are not unmindful of the need to save and they recognise the importance of their future financial security, which is commendable during times of financial difficulty.

But as ‘a nation of savers’, they are still some distance away from the discipline shown by other countries, and catching up will become all the more important as the future prospects for public and private pensions begin to unravel.

How you switched banks to get better rates on your savings? Tell us about your switch and whether it has worked out. Are you part of the 38% who remain content with your savings, and could you be making more from your money? Check Which4U’s savings account range to find out!

Mark Hornby