Britain's Borrowings Break £11 Billion Barrier

For Immediate Release: 17 December 2007

A climate of high interest rates and the ongoing consumer uncertainty over the credit crunch have led to consumers accessing their savings to pay for summer expenditure including holidays, leading to a reduction in the UK’s savings balances.

Also, according to Unbiased.co.uk’s latest Savings Brake* figures, the UK as a whole amassed over £11.7 billion in borrowings in Q3 2007.

The Savings Brake research, which reveals the ratio of how much we are borrowing, not including mortgage debt, contrasted with how much we are saving, also shows another worrying trend. In addition to rising borrowing levels, UK savings dropped by over £11 billion in Q3 2007. This means that for every pound UK consumers saved during the third quarter of 2007, they borrowed 35 pence. This is a significant increase from the 13 pence borrowed against every pound in the previous quarter.

David Elms, Chief Executive of Unbiased.co.uk, commented: “We have seen a lot of activity in the financial markets in the third quarter of 2007, which marked the beginning of the Northern Rock crisis. Interest rates over the summer were still at a high level of 5.75% and many people will have felt the impact of the credit crunch starting to bite their disposable income.

“While the high level of borrowing and a drop in savings for this quarter may come as no surprise, it is a worrying development. And with the cost of Christmas about to hit the nation’s pockets over the next couple of months it is unlikely that we will see a significant improvement in the Savings Brake ratio. It is therefore important for people to take control of their finances now to ensure their savings and borrowings remain at a healthy level.”

To take control of your spending and borrowing, visit www.unbiased.co.uk/getsaving to download your free copy of Unbiased.co.uk’s 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 www.unbiased.co.uk/getsaving or calling 0800 085 3250.

-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 342863.

Table 1

Borrowing (ex mortgages) £m

Savings £m

‘Savings Brake’

pence borrowed for every pound saved

2001 Q1      

11,543

21,049

55p

Q2

13,662

27,419

50p

Q3

13,393

22,115

61p

Q4

15,736

25,631

61p

2002 Q1

18,190

23,087

79p

Q2

18,560

28,655

65p

Q3

21,434

20,993

102p

Q4

20,026

27,045

74p

2003 Q1

14,582

21,261

69p

Q2

18,340

25,632

72p

Q3

24,828

19,432

128p

Q4

22,642

30,345

75p

2004 Q1

20,602

19,430

106p

Q2

19,994

29,135

69p

Q3

19,662

24,266

81p

Q4

17,316

32,885

53p

2005 Q1

10,437

20,194

52p

Q2

9,429

32,019

29p

Q3

17,303

24,788

70p

Q4

17,662

33,692

52p

2006 Q1

4,446

30,355

15p

Q2

18,661

38,363

49p

Q3

15,860

34,115

47p

Q4

9,579

34,604

28p

2007 Q1

12,127

34,668

35p

Q2

5,678

45,478

13p

Q3

11,774

34,133

35p

-          ends –

For further information please contact:

David Elms

Anna Schirmer/Jonathon Grove

Chief Executive

Lansons Communications

Unbiased.co.uk

020 7294 3682

020 7833 3131

For expert comment or case studies from over 200 media-friendly IFAs, journalists should call Unbiased.co.uk’s Media Services hotline on

020 7294 3682 or search online at www.unbiased.co.uk/media

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