UK consumers are continuing to put less money into savings accounts, according to new figures from the High Street banks. Personal deposits grew by just 2.3% in July, the lowest growth rate for eight years, and below the rate of inflation. Cash Individual Savings Accounts (Isas) also saw a big annual decline.Consumers put £162m into bank Isas in July, a drop of 3.3% compared to July 2016.That is the largest fall since 2007.Savings rate at record low
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The Office for National Statistics (ONS) has already reported that the savings rate – the amount that households save out of their income – fell to just 1.7% in the first quarter of 2017, the lowest rate recorded.One reason might be the fact that, since April, wages have risen more slowly than inflation, meaning people cannot afford to save as much.However, the ONS has said the savings ratio has been falling since 2015, suggesting that the decline may be driven by low interest rates, which make savings less attractive.UK Finance, which represents the banks, said tax changes were also be a factor.Since April 2016, savers have been allowed to make £1,000 a year in interest without paying tax.That makes Isas, which are free of both income and capital gains tax, less attractive.