Key Highlights

• The overall savings index had its biggest drop in six months in April, falling to 113 points from 131 in March
• The savings attitude sub-index, which asks people how they feel about the amount they are able to save, fell 31 points, the most since October 2015
• The level of people aged under 50 who felt positive about the amount they can save almost halved
• There has been a fall in those who believe government policies encourage spending

The Nationwide UK (Ireland) Savings Index, which measures overall consumer sentiment towards saving, fell last month to its lowest level of 2016. It was its biggest fall in six months, as talks continued over the formation of the next government.

The decline in sentiment was led by a decrease in those who felt positive about their ability to save. In the under-50 age group those who said they felt good about the amount they could save fell to a reading of 125.6 in April from 230.7 in March, a 46% fall month on month. The level of people aged over-50 who felt positive about the amount of surplus cash they could save also dropped.

The savings environment index, which asks people if they feel now is a good time to save and whether government policies encourage them to save, dropped to 119 points in April from 125 points the previous month. The biggest drop in those who believed the government’s policies encouraged them to save was amongst the over-50s age group. Some 38.4% in that category felt negative in their view of it now being a good time to save.

Commenting on the findings, Brendan Synnott, Managing Director of Nationwide UK (Ireland) said:

“At the moment savers don’t have a great deal of visibility in terms of what might lie ahead for government policy. While any index is subject to volatility, the ongoing uncertainty as to the policies, or indeed formation of the next government has likely had an effect on savings sentiment.

“It will be interesting to see how the index responds in the coming months when the shape of government policy becomes clearer.’’

The proportion of people who said they would use surplus cash to pay off debts, including their mortgage, increased to 44.6 per cent in April from 40.1 percent the previous month. A further 10.9 per cent of those surveyed said they would spend the extra cash, compared to 15 percent who said the same thing in March. Eight per cent of people said they would invest it.