Welcome to the latest ING Direct Consumer Savings Monitor, the first quarterly report of 2012.
At the end of last year, consumers saw restoring their savings as their number one financial priority for 2012, but in the tough economic environment we were unsure whether they would be able to deliver on this.
However, I’m pleased to report that reserves have risen significantly in the first three months of the year, with median savings balances growing by £284 to stand at £1,858 – the highest amount for nearly two years. This is also the first time since 2009 that we’ve been able to report a consecutive quarterly rise in savings balances.
While this was unexpected, it was down to consumers continuing to be conservative with spending and borrowing in the first quarter of the year (as they were over Christmas). This behaviour may have played a part in recent negative GDP growth figures, but it seems that it has allowed the public to deliver on their resolve to restore savings.
Some consumers also have the added boost of PPI compensation payments starting to come through. Using data from our regular survey of consumers within the monitor we estimate that around £5.6 billion is due to be paid out in PPI refunds this year to over two million people.
The same data suggests that a third of such payments are destined for savings accounts which would equate to £480 million of PPI refunds being deposited into savings this quarter – rising to £1.9 billion by the end of this year.
On top of this, the public still see savings as their number one financial priority, so it will be interesting to see in the next quarter the impact on Britons’ balance sheets and the effect this will have on the current economic situation in the UK.
