Saving habits decline as easy access balances fall £100bn last year

Last year saw a £100bn fall in balances saved in easy access accounts, the largest withdrawal recorded since the 2008 financial crisis, new analysis by Coventry Building Society has highlighted.

The society analysed Bank of England figures which also showed that household savings grew by just 2% year-on-year, with an increase of £36bn the lowest level of annual growth seen in 15 years.

Coventry Building Society suggested that yearly figures typically display positive jumps in flexible savings, yet last year, easy access deposits failed to bounce back after a year of higher food and fuel bills as well as persistent cost of living pressures.

As a result, money held in both fixed accounts and ISAs did increase last year as people took advantage of locking in their money at higher rates and tax efficient savings by £71bn (36%) and £47bn (16%), respectively.

The statistics also showed that on average, £258bn, a figure equating to over a fifth of all easy access funds, earned no interest throughout 2023, meaning that households missed out on £457 each by simply not checking the rate on their savings and switching to better paying accounts.

Head of strategy at Coventry Building Society, Jeremy Cox, said that UK has “lost its savings habit” after building up a substantial safety net during the pandemic.

“Money in easy access accounts took a drastic downturn as households drew on their day-to-day funds to support spending and higher price rises,” Cox said.

“With over a quarter of a trillion of pounds still languishing in accounts earning 0% interest, households not only felt the savings squeeze, but also lost out on hundreds of pounds worth of interest by not moving the savings they had into better paying accounts. And that’s on top of the impact high inflation had on the amount people can buy with their savings throughout 2023.”

He added: “As the end of tax year approaches, those with larger savings pots need to be mindful of income tax and decide whether moving some of their savings into an ISA is the right move for them, providing a tax efficient way of saving £20,000 a year.

“The Chancellor’s Budget on 6 March may also include measures for savers – so another good reason for people to review their savings plans in the next couple of months.”



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