UK Savings Ratio At Historic High

GDP is down (by a record 20.4 per cent for the three months to June 1), employment is down (by 0.2 per cent; the equivalent of 220,000 jobs, during the same period 2) and consumer confidence is down3, but one socio-economic metric defying a downward trend since the onset of the pandemic is saving.

Saving has increased exponentially. Between April and June, UK households increased their savings deposits by £55bn4, compared to typical monthly deposits of approximately £5bn4.

In 2019 UK household saving had fallen to a near 50-year low (with the proportion of the nation’s disposable income being saved, rather than spent, languishing at just 6 per cent) but the Office of Budget Responsibility has recently calculated that this national savings ratio5 could have reached a record high of 28 per cent6 during the second quarter of this year – almost double the previous peak of 15 per cent recorded in 19936.


During periods of economic contraction it’s common for the savings ratio to increase, as households shore up their finances in the face of uncertainty, but this current shift (as with so much in recent months) has been unprecedented. For context, following the Financial Crisis of 2008, the UK savings ratio peaked at ‘just’ 13 per cent6.

The current scenario is driven by precautionary saving in anticipation of prevailing financial headwinds and job insecurity as well as a restriction of consumer spending during ‘lockdown’ and since. But whilst the Bank of England forecasts that the savings ratio will stabilise towards the end of 2020 at nearer 17 per cent, it raises the question; could this forward looking, prudent mind-set, eschewing near-term consumption in favour of longer-term planning and financial security, become the ‘new norm’? Could this potentially be a seminal moment heralding a step change in the way people collectively think about saving and investing?

The events of the last five months threaten to impact our lives in ways that we are yet to fully appreciate, but they have already created a behavioural step change and could be the catalyst for a more permanent shift in the nation’s perception and prioritisation of saving, investing and making provision for the future, whatever it might hold.

To discuss how we can support you in delivering optimal outcomes for your clients as part of your savings and investment proposition, call us on 0203 745 8130 or contact us at Flagstone currently7 offers clients access to 25 exclusive deposit rates and a choice of more than 250 accounts from 45 partner banks.


1 Office for National Statistics - Gross Domestic Product (GDP) monthly estimate, UK: June 2020

2 Office for National Statistics - Labour market overview, UK: August 2020

3 Deloitte - Consumer Confidence Index; the aggregate of six individual measures: levels of disposable income, levels of debt, job security, job opportunities and career progression, children’s education and welfare, and general health and wellbeing.

4 Bank of England - Money and Credit: June 2020

5 Office of Budget Responsibility - Decomposing the savings ratio

6 Office of Budget Responsibility - Fiscal sustainability report July 2020

7 As at 17 August 2020



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