Global Macro Service > Research Briefings > United Kingdom

Why the saving ratio is unlikely to flip anytime soon

With inflation down and wages rising, the outlook for consumer spending in the UK is brightening. But should households opt to boost savings, the mood could darken.

We think a meaningful rise in the saving ratio from its recent record lows is unlikely, though. Austerity may be easing, but the drag from fiscal policy is still set to limit households' savings resources, while the durability of the current expansion may reduce the motivation for precautionary saving.

What's more, any rise in interest rates on savings accounts will probably be even slower than the modest pace we expect for official rates. And with the demographic shift toward an older, less thrifty, population, the appetite of households to save looks set to remain subdued.

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