Not necessarily, says Michael Wilson. It depends how you define the term.
Britain’s economy may be outstripping most of its European rivals at the moment – indeed, according to George Osborne we’re beating the world – but UK households are slacking when it comes to how much of their disposable cash they’re saving each year.
Well, sort of.
If you think Spain and Italy are having a hard time, you might be surprised to hear that, according to the Post Office’s Future of Savings Study, they are potentially able to save more than us. In fact, says the Post Office, the UK currently sits eleventh in a league table of average potential household savings across 18 advanced economies. And only just ahead of Portugal, which is battling with real trouble at the moment.
The Post Office’s study, conducted alongside the Centre for Economics and Business Research, examined the savings habits of these 18 countries against a comparable cost of living, and it found that since 2010, the average amount that each UK household could potentially save each year has fallen by more than 10% to £3,781. That was almost £5,000 less than Australia, which has the most money available to save, and it’s fully £3,286 less than the highest placed European country, Switzerland.
Should this trend continue, Post Office Savings predicts that by 2018 Britain’s average of £3,781 will have fallen to as little as £3,000 – which, it says, would place the UK below the majority of advanced European economies.
The Ugly Details
Rather incredibly, says the Post Office, the average potential household savings for Spain and Italy country came to a staggering £4,644 and £5,409 respectively in 2013. Whereas of all the countries analysed, Estonian households had the smallest amount of money available to save each year, with only £1,039. Interestingly, the report adds, the US actually fares worse than the UK, with a pot of only £3,442.
Do Those Figures Really Mean That?
But hold on there. What we’re looking at here is a potential pot, not an actual one. Stop us if we’re wrong, but surely there are limits to how much of the available cash actually goes into savings? If an Italian prefers the coffee shop and a Spaniard spends it all on lottery tickets, how do these figures help?
Subject to those provisos, the report’s findings are as follows, with projections ahead to 2018:
Source: Eurostat, OECD, World Bank, Cebr analysis