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Savings accounts would not save unemployed Brits

25 July 2008 / by Rebecca Sargent
More than a third of Brits could hit financial rock bottom within just 11 days if they were to lose their jobs, research from Yorkshire Building Society has revealed.

The figures show that 36 per cent of the 2,001 people questioned have savings accounts with less than £500 in that would last just 11 days. The news is concerning as Britain looks on course for a recession that could see further employment cuts.

The house-building industry has already been forced to make huge cuts to its staff as the mortgage market has become restricted, and the financial sector has also taken a blow as its future becomes uncertain.

News today from the Office for National Statistics (ONS) that revealed retail sales fell faster than expected in June could also have an impact on employment. Overall, the research from Yorkshire Building Society found that the average monthly outgoings of those questioned was £1,445, whereas the average savings totalled £2,474 meaning the average person could survive for less than two months if they were struck off from their job.

The research also found that widows would be able to survive for the longest on their savings accounts, a total of 120 days, whereas those that have been through divorce would only survive for an average of 35 days.

Of those questioned, 90 per cent admitted to not having personal income protection insurance that could help if they were made unemployed. In addition, 68 per cent either had no idea how they would survive or had unrealistic expectations of what it would take to get by. However, 19 per cent believe they could get by on the state benefit allowance of £75.40 a week, whereas average expenditure per week totals £333.56.

Ironically, of those who do have some protection in place, 47 per cent had life insurance that would only cover in the event of death and not areas like critical illness that could render a person unemployed.

Commenting on the research, corporate affairs manager at Yorkshire Building Society, Tanya Jackson, said: "In the current economic climate this research paints an extremely alarming picture for those consumers without any protection products in place. Finances for many are already finely balanced due to the rising cost of living and the research reveals that both state benefits and savings are not viable options for the majority of consumers to rely upon for an adequate length of time.

"It is extremely worrying to see that many Brits are 'living on the edge' and we therefore urge consumers to take a look at their protection needs in order to assess how they would cope financially if they were taken ill and whether they would benefit from the security that a protection scheme provides."

© Fair Investment Company Ltd