Bri­tain’s be­come a na­tion of bor­row­ers, not savers

Daily Mail - - Life - By Hugo Dun­can Deputy Fi­nance Ed­i­tor

A DECADE of ultra-low in­ter­est rates has made Bri­tain a na­tion of bor­row­ers rather than savers, of­fi­cial fig­ures showed yes­ter­day.

The Of­fice for National Sta­tis­tics said house­holds be­came net bor­row­ers in 2017 for the first time since records be­gan in 1987 as spend­ing ex­ceeded in­comes.

The re­port also showed sav­ing lev­els fell to their low­est since at least 1963 as fam­i­lies failed to set money aside for the fu­ture. House­holds spent £14.4bil­lion more than they earned last year, the sta­tis­tics agency said. House­holds also bor­rowed £4.6bil­lion more than they saved.

At the same time, just 4.9 per cent of earn­ings were set aside as sav­ings last year, the low­est since this mea­sure was first recorded in 1963. Savers have been put off by pal­try re­turns while fam­i­lies have been en­cour­aged to bor­row by record-low in­ter­est rates.

The base rate set by the Bank of Eng­land is cur­rently 0.5 per cent – just a tenth of the average 5 per cent rate seen be­fore the fi­nan­cial cri­sis.

The ONS said the prospect of a rate rise in the fu­ture en­cour­aged house­holds to take ad­van­tage of cheap bor­row­ing while they still could. An in­crease in the base rate was pre­dicted by many last year to off­set ris­ing in­fla­tion. ‘ This ex­pec­ta­tion may have led many house­holds to bor­row and spend now while the cost re­mained low,’ the agency said.

A spokesman for debt char­ity Step Change warned many fam­i­lies were build­ing up prob­lem debts: ‘Far from be­ing a na­tion of savers, we’re now a na­tion of bor­row­ers.

‘If we could shift that bal­ance a bit … we could im­prove the fi­nan­cial well­be­ing of many house­holds.’

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