A recent study reveals more than 11 million Britons have savings of less than £1,000. Euronews looks at the figures and takes a look at the situation across the rest of Europe.
One in three working-age adults in the UK have less than £1000 (€1175) in their savings account, according to new report from Resolution Foundation.
This means that more than 11 million people may have difficulties facing unexpected “rainy day” moments, such as family crises or not being able to put enough money away for retirement.
The cost of living crisis has left individuals with small amounts of savings having to borrow in their hour of need. Even those with more than £1000 in savings – some 18% – said they used credit cards, overdrafts, or borrowed from formal lenders to cover daily living expenses between July 2023 and October 2023.
Resolution Foundation also found a direct link between low savings and poor mental health. When savings are low, it can lead to anxiety and a decline in mental well-being. Conversely, worsening mental health might make it harder to save, possibly due to its impact on earnings.
The figures regarding retirement savings are also discouraging, according to the same study. Some 39% of individuals aged between 22 and the State Pension age – currently 66 but rising to 67/68 between 2026 and 2028, and totalling 13 million people – were found to be under saving for retirement. Specialists believe a target replacement rate for a comfortable pension would be at least two-thirds of pre-retirement income.
The rest of Europe
In contrast, EU savers fared better, with households across the EU saving an average of 12.7% of their disposable income in 2022. Even so, that was a significant drop from the 16.4% recorded in the previous year, as reported by Eurostat.
Germany led the way with average savings of 19.9%, highest gross saving rates among EU members in 2022. This was followed by the Netherlands at 19.4% and Luxembourg at 18.1%.
Savings rates of less than 10.0% were recorded in 2022 for 12 other EU members. Poland and Greece were among them, reporting negative rates of -0.8% and -4.0% respectively and indicating that many households spent more than their gross household disposable income.
Similar to the UK, those savers either spent spare money accrued from earlier periods or resorted to borrowing in order to finance their spending.