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Home » Economic » Brits Draw Down Record Amounts Of Savings To Cover Rising Cost of Living | Zero Hedge

Brits Draw Down Record Amounts Of Savings To Cover Rising Cost of Living | Zero Hedge


Brits Draw Down Record Amounts Of Savings To Cover Rising Cost of Living | Zero Hedge.

In the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding savingsYahoo UK reports that households are pulling money out of their savings accounts at the fastest rate in modern record, according to Bank of England figures. Since the recent recession began, millions of workers have suffered repeated effective pay cuts as inflation has outstripped pay rises, and while consumer spending was one of the main contributors to the sharp rise in gross domestic product in the third quarter, “consumer strength usually reflects increased borrowing but this hasn’t been the key factor recently.”

In the year to October, the amount of cash in time deposits and cash ISAs fell by 4.7%, while the amount families have in their instant access current accounts or in their pockets rose by 11.2%. This inflationary shift of cash is the biggest since comparable records began in the 1970s.

 

Via Yahoo UK,

In the past year, families have withdrawn £23bn from their long-term savings accounts to convert into cash and put into current accounts – the equivalent of around £900 for every household in the country.

 

It is the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding their savings accounts.

 

 

According to economists, the shift of cash is the biggest since comparable records began in the 1970s, and reverses much of the sharp increase in saving that happened at the height of the recession.

 

On Thursday, the Chancellor’s Autumn Statement is expected to focus on measures to help households deal with the rising cost of living, including energy bills.

 

Since the recent recession began, millions of workers have suffered repeated effective pay cuts as inflation has outstripped pay rises.

 

 

Consumer spending was one of the main contributors to the sharp rise in gross domestic product in the third quarter, and a further strong increase is implied by the Bank’s money figures.

 

But while the figures suggest that the economy is strengthening, they will also be taken as further evidence that savers are being deterred from putting money aside by record low interest rates.

 

 

Some also suspect that with households still facing a significant squeeze as a result of higher living costs, many are having to dig into their savings in order to afford day-to-day items.

So the UK economy is surging and being lauded as evidence of QE’s efficacy but the reality is inflation is eating away at people’s wealth and hot money flows have caused the cost of living to rise dragging out the mainstay of future growth – savings – to meet consumption needs today. How long before government inflation data reflects this?

 


2 Comments

  1. The economy may be looking good on paper BUT the reality is more people owe more money than EVER before. 1 in 3 have loans, most owe money to loan sharks in a system called payday loans, mortgages aren’t being paid yet the properties are not being repossessed as there is no one out there to buy them.
    The poor exist on charity, those not admitting to debt live on credit.
    Why the UK and US haven’t exploded into rat s##t and chaos is a constant wonder to me.

    • The elite seem capable of kicking-the-can-down-the-road a bit longer through the collusion of the main central banks and their endless money-printing. The conspiracy theorist in me thinks they need to prepare themselves further for the coming massive protests before allowing things to collapse. We see ‘democratic’ countries passing laws to ban protests (Spain) and freedom of the press (Japan, Britian, U.S.), a sure-fire hint that they expect worse. We see various government agencies arming themselves and militarising local police (U.S.). We see various liberties contracting and more and more propaganda about ‘domestic terrorists.’ The elite need to get all their eggs in a row and then the shit will hit the fan…

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