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Nationwide's Savings Index falls for first time in two months

22 September 2009 / by Andy Davies

Nationwide's Savings Index has fallen by five points suggesting the savings market has 'yet to stabilise'.

Despite increases in the previous two months, figures for August indicate that opinions amongst savers towards the savings market remain unsettled as the Savings Index fell from 82 points in July to 77 points in August.

This was joined by falls in Nationwide's other three indices as the Importance of Savings Index decreased by 12 points to 86, while the Savings Environment Index now stands at 66 points representing a five point decrease, as 52 per cent of people believe now is a bad time to save.

The Future Saving Index also fell, but only by one point to 105, as the number of people who believe they will be able to save more in six months' time decreased from four per cent to two per cent.

Andy Hutchinson, head of savings at Nationwide is disappointed to see the Savings Index fall, saying it "suggests that confidence in the savings market is still volatile and yet to stabilise, despite our earlier optimism".

Commenting on the performance of the Importance of Savings Index, he said: "The 12 point decrease in the Importance of Savings Index nearly wipes out the 13 point increase from the previous month. This was largely due to a reduction in the number of people who believe it is important for them to personally save. However, with the difficult economic climate continuing, it is still important for people to save where possible."

Mr Hutchinson attributes the reduction in the indices to savers using spare cash to pay back debts rather than save.

He added: "Net repayments of debt are of course a form of saving. However, consumers who use spare cash to repay debt will have less money to deposit, and this could well impact negatively on sentiment around the ability to save. This may help to explain some of the weakness in the savings index this month, particularly in the savings environment and future savings indices."

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