UK consumer borrowing has doubled over the last quarter while saving levels have dipped by over £11 billion, according to the latest research.
The Savings Break report from Unbiased.co.uk has revealed that while consumer borrowings doubled in the last quarter to over £11.7 billion, for every pound saved, the British public borrowed 35 pence - a significant increase from the 13 pence borrowed against every pound in the previous quarter.
The trend is being attributed to a number of factors but namely the current turbulence in the financial markets coupled with ongoing uncertainty over the credit crunch. This has led to consumers accessing their savings in order to be able to afford luxuries such as holidays later on in 2008. This has impacted directly on the UK savings balance.
Commenting on the findings, David Elms, Chief Executive of Unbiased.co.uk said: "We have seen a lot of activity in the financial markets in the third quarter of 2007, which marked the beginning of the Northern Rock crisis. Interest rates over the summer were still at a high level of 5.75% and many people will have felt the impact of the credit crunch starting to bite their disposable income.
"While the high level of borrowing and a drop in savings for this quarter may come as no surprise, it is a worrying development. And with the cost of Christmas about to hit the nation’s pockets over the next couple of months it is unlikely that we will see a significant improvement in the Savings Brake ratio. It is therefore important for people to take control of their finances now to ensure their savings and borrowings remain at a healthy level."
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