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2008: The 'Year of two halves' as Brits abandon saving in favour of debt repayment

        Credit crunch prompts public rush to repay last two years’ borrowing at the expense of new saving levels

        An IFA can help restore your financial balance: visit Unbiased.co.uk

Research from Unbiased.co.uk, the professional advice website, reveals the extent of UK consumers’ flight from saving to debt repayment during 2008. 

According to Unbiased.co.uk’s Savings Brake* research, at the start of last year, the public was borrowing 66p for every pound saved with new saving levels rising to a high of 36 billion last spring (Q2).  However, by the last quarter of 2008, we were repaying 1.76 for every pound saved, and new saving during this period almost halved to 19 billion.

Overall for the year, Brits repaid a staggering 38.6 billion worth of non-mortgage debt, more than cancelling out all they had borrowed in 2007 and 2008. This marks the first year in Unbiased.co.uk’s eight-year study where Brits paid off more debt than they took out in new borrowings.

Unbiased.co.uk’s Savings Brake research reveals the ratio of how much we are borrowing (excluding mortgage debt) contrasted with how much we are saving. The research shows that for every pound Brits saved in 2008, they also paid off an impressive 37 pence of debt. Overall, the nation managed to put away over 103 billion in savings during 2008, which however marks an almost 30% decrease compared to savings levels in 2007 (146 billion).

However, paying off debts has not been a clear focus throughout all of 2008. The first half of the year saw Brits continuing to take out over 23 billion in new debt. The second half in contrast saw a dramatic shift in behaviour, with the nation re-paying debts of over 61 billion. Savings levels during the same period plummeted by 45%, from 67 billion in the first half of the year, to 37 billion during the second half.

David Elms, Chief Executive of Unbiased.co.uk, comments: “2008 was a year of two halves in terms of people’s financial behaviour. The financial turmoil which hit Britain last summer prompted a dramatic retreat from savings in favour of starting to pay down personal debt.  This shift itself is no surprise, but its severity confirms the historic impact of the credit crunch on consumer behaviour and evidence suggests this repayment trend is continuing at pace.”

“There is an awful lot of consumer fear and confusion out there right now, and it is vital people seek professional advice from an IFA to enable them to strike the best balance between borrowing, saving and other aspects of their finances throughout these difficult times.”

Those interested in boosting their savings should visit Unbiased.co.uk  and download a dedicated guide - Join the Savings Revolution - which looks at how you can budget to save more, and options of where to put any extra money.  You can also obtain details of local independent financial advisers to talk though the most suitable savings options for you by visiting Unbiased.co.uk

-ends-

Notes to editors

*According to independent analysis of the most recent official figures conducted by independent agency, RAKM, on behalf of IFA Promotion.  Data sources are Bank of England, British Bankers Association (unsecured borrowing + equity release, no mortgages), ABI, AIC and IMA.  With detailed queries on this analysis call Paul Hersey on 01737 213867.

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ENDS

For further information on Unbiased.co.uk, the professional advice website please contact:

David Elms / Richard Winder	Anna Schirmer/Jennifer Comerford/ Anna Moulds
Unbiased.co.uk	Lansons Communications
020 7833 3131	020 7294 3682

For expert comment or case studies from over 200 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook to search online or call Unbiased.co.uk’s Media Services hotline on 020 7294 3682.

PLEASE NOTE: We have now discontinued the consumer hotline and so consumers seeking an IFA should visit www.unbiased.co.uk

Notes to Editors

Unbiased.co.uk, the professional advice website

Unbiased.co.uk is the free and confidential UK-wide search service matching consumers with the most appropriate local professional advisers for their needs.  In 2008, Unbiased.co.uk fulfilled over half a million searches for local, professional advice. 

The portal currently houses three professional advice searches: ‘Find an independent financial adviser’, ‘Find a mortgage adviser’, and (soon to launch) ‘Find a solicitor’.  These searches enable consumers to find relevant professional advisers by postcode, area of specialism, qualification and payment method. 

IFA Promotion, the organisation behind Unbiased.co.uk, is now in its 20^th year, and was set up to promote the benefits of independent financial advice to the consumer. 

Unbiased.co.uk’s product provider sponsors

AEGON Scottish Equitable Plc	Lockton
Alliance Trust	Lutine Assurance Services
AXA Life	MetLife
Bright Grey	National Savings & Investments
BPP	New Star Investment Funds
Canada Life Ltd	Norwich Union Life
Cardif Pinnacle	Prudential
The Children’s Mutual	Royal London 360
Clerical Medical Investment	Scottish Life
Friends Provident	Scottish Widows Plc
The Hartford	Standard Life Assurance Company
Invesco Perpetual	Unum
Legal & General	Zurich Intermediary Group
Lincoln

Registered Office: Unbiased.co.uk is the consumer brand of IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606