The newest data released by the Office for National Statistics state that Britons are saving more as 7.4% of households report increasing their savings in the second quarter which is up from 5.9% in the first quarter. This increase in the amount households are saving is in response to a feeling that a recession is imminent.
Although disposable income only increased by 1.2% in the same quarter, which followed on the heels of a 1.7% decrease in the first three months, it was actually the fastest increase in the past two years. ONS figures show that Britons are feeling the impact of skyrocketing inflation and slow wage growth which has put the squeeze on finances.
The newest data was released two weeks late because of updates on the ONS national accounts data system. According to what the Office for National Statistics is seeing, Britons are reluctant to part with cash because they believe they anticipate a recession or at least tougher times economically.
For the last year the economy in Britain has been literally stagnant and the global outlook is gloomy at best. Added to that, the government has drastically cut back spending which has prompted widespread fear that the economy just might be in for tougher times.
All of this has added up the Bank of England’s decision to begin a new round of quantitative easing as £75 billion is set to bolster the recovery efforts. According to a policymaker for the BoE, there is every possibility that the third quarter of this year will show a further contraction in the economy.
As a result of all these factors, Britons are spending less and saving more in the event of another recession. It will be interesting to see if the recent deal reached in Brussels on the Greek bailout will have a positive effect the global economy, and Britain in particular.
