Key Highlights 

• The level of people who felt it was a good time to save in May, and that government policies encouraged saving, fell to its lowest point since December 2015.
• The drop was shown in both the over-50 and under-50 age groups.
• The overall Savings Index rose to 119 from 113. 
• The level of people who felt good about the amount they can save rose to 130 in May from 107 in April.

The level of people who felt it was a good time to save fell in May to its lowest point since December 2015, as the new government took office and rents continued to rise, May’s ESRI/Nationwide UK (Ireland) Savings Index showed.

The Savings Environment sub-index, which asks respondents if they feel now is a good time to save and whether government policy encourages saving, fell to 108 points in May from 119 points the previous month. That was the lowest reading in the index since December 2015.

The decline this month appears to be driven by both the over 50s and under 50s age groups, with 60.6 and 51.8 per cent respectively feeling negative in their view of the ability of current government policy to encouraging saving.

• The main index rose to 119 points in May from 113 in April, led by an increase in those who felt positive about the amount they could save.
• The Savings Attitude sub-index, which asks respondents how they feel about the amount of money they can save, rose to 130 points in May from 107 in April.

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

“In May savers faced a number of issues. The government had just been formed and people lacked certainty as to what its policies might look like or how it would perform given it is a minority government. This appears to be having an impact on people’s view of whether it is a good time to save.

“Beyond that the increase in rent levels across the country is also contributing to uncertainty regarding savings.”

“The May savings index is at its lowest reading so far this year. As the government beds in it will be interesting to see how the index performs going forward.’’

In terms of consumers’ intentions for any surplus money, the percentage of those who said they would use the extra to pay off debts, including their mortgage, fell to 40.3 percent in May from 44.6 per cent in April. Some 10.3 per cent of respondents said they planned to spend the extra money, down from 10.9 per cent in April, while 10.7 per cent said they would invest it.

The proportion of respondents who said they would choose to save the money increased in May to 38.7 percent from 36.5 percent in April.