"Squeezed middle" face uphill struggle in drive to boost savings

Monday 13th February 2012

The continued tough financial climate has driven Brits to try and grow their savings pots, reveals the 2012 HSBC Savings Map of Britain.

However, almost half the country's adults - the "squeezed middle" - faced spending pressures that saw them struggle to boost their reserves.

Despite interest rates remaining low, over seven in ten (71%) Brits saved in 2011 indicating recognition of the importance of having some money set aside. Only 4% said that the low rates are a disincentive to save and 3% say they would rather spend than save their extra money.

The largest group of those who do save were able to invest more than they withdrew in 2011 and this was higher than in 2010 (35% vs. 32%).

Those with children of school age have particularly felt the squeeze: 35-44 year olds were the only group that were more likely to say they withdrew more than they invested than vice versa in 2011 (34% vs. 31%). Thirty four per cent of 45-54 year olds also withdrew more than they invested.

Mindful of the uncertain financial climate, 21% of people now say that saving for a rainy day is their priority. In contrast, long-term goals are losing out, with one in ten (12%) planning to save more over the next 12 months to contribute to their long-term goals, compared to one in five in 2010.

“Given the harsh financial climate, 2011 was a tough year for savers, but it is positive to see the substantial effort made to save in spite of this,” said Bruno Genovese, head of savings at HSBC.

“Unfortunately, the high cost of living forced many families in the squeezed middle to dip into their savings pots, leaving them with less than they started with.

"While 2012 is also likely to prove a challenge for the majority of British savers, intentions to save remain high, with people aware of the need to build up a savings cushion in case of a rainy day or to achieve their long and short term goals.”

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