Wednesday, Jan 10, 2007
HBOS predicts savings to exceed 1 trillion in 2007
Guardian Unlimited: Savings set to peak as Britons shun extra debt
Martin Ellis, Chief economist at HBOS predicts that people will be saving 6.2% of their disposable income this year, and house prices will only increase by 4%. He claims that "Households are rediscovering the savings habit".
Posted by jellycaster @ 11:20 AM (145 views) Add Comment
16 Comments
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1. inbreda said...
I'm highly suspicious of the motivations for this report.
People don't dig themselves out of debt and into the savings habit overnight. There is something going on here. Ideas anyone?
My best guess is he's trying to avoid talk of bad debt provisions.
2. talking rot said...
My instant reaction was to think "Why would people save?"
In the world of spin, does saving mean putting cash into the bank (or equivalent low risk accumlation vehicle) for a rainy day? Or does saving include paying off one's vast debt? If it is the latter, then all this means is that consumers will stop consuming as they are indebted up to their eyeballs.
If consumers stop consuming, the party is over at last! (Unless another element of the economy picks up of course).
3. Sam said...
He's playing with averages. yes there's alot of money in accounts but only a small percentage of the population account for those savings. that fact that current accounts pay much more interest than they used too means people may not want to move them to a savings account loaded with term and conditions.
I think you'll find it's probably about ~40% of people saving something, half of that are saving 'just enough', one quarter of that are doing well, and the last quarter are rolling in it. fogeting the ~60% who are living hand to mouth.
Finally, there will also be those people who are saving to buy a place. i.e will hold 10-20k in their bank accounts hoping to buy in the next couple of years.
4. Surfgatinho said...
Savings my arse! Debt is still going up at an astonishing rate. Weren't the Christmas retail figures 'much better than expected'?
5. Ticktock said...
Nobody can predict the future, and certainly not economists who have a notoriously dreadful record in this regard.
There are few things in life as predictably unreliable as an economists 'crystal ball' ( Government statistics aside) and yet in the 'new' economy, 'gurus' and 'experts' seem to hold a status of prophet like proportions. Its just bullshit.
Economist 'predictions' are usualy little more than a combination of wishful thinking, and vested interest in a particular outcome. It is probably best to treat them as such.
6. Van Hoogstraten said...
If there are say 30million wage earners in the UK, and savings are going to go up by 70billion, that means the average wage earner will save around 2300quid more this year. Something a bit fishy with the numbers.
7. Cyril said...
Very interesting. I had a quick look on HBOSPLC website and found an old press release from 2003 about the savings ratio. Apparently "the saving ratio is a very good cyclical indicator" and a good indicator of the health of the housing market. Basically when savings start to go up, the housing market has had it. HPC is coming!
The press release is worth a read if you're into this sort of thing - see www.hbosplc.com/media/pressreleases/articles/halifax/2003-07-00.asp
Incidentlaly the long term average is about 8% and the UK savings ratio tends to be lower than other countries because in the UK we tend to treat housing ewquity as savings.
8. george monsoon said...
I too smell a rat here, ... and as we know 85% of statistics are made up on the fly..!!
9. little professor said...
Also from the article...
HBOS also said higher interest rates would dampen house price inflation. "We've already seen early signs of this happening," he said. "Our recent house price index showed a fall in house prices in December *****and we expect this to continue*****."
HBOS calls HPC!
10. tyrellcorporation said...
I think the populous is polarising. Those with huge debts are becomming more indebted and instinctive savers are becomming even more cautious. This is going by personal experience with friends and colleagues and my general observations. Some hard facts about the ratios of money spent over Christmas would be very interesting - savings, wages or credit.
Saving is becomming more appealing though as IRs start to rise.
11. Millard said...
George, I thought it was 87% of stats are made up on the fly ;-)
The figure of 6.2% and £1trillion includes pension provisions, once you average that out across the population and realise that the majority of that money is held by a few then it looks far from rosy.
12. millard said...
George, I thought it was 87% of stats are made up on the fly ;-)
The figure of 6.2% and £1trillion includes pension provisions, once you average that out across the population and realise that the majority of that money is held by a few then it looks far from rosy.
13. sirgoogle said...
This story is only relevent because tomorrow is the 11th. The MPC meets to hopoefully raise IRs. The BoE also meets - to probably do the same thing.
This story is a weak attempt to try and pursuade the MPC to leave the IRs as they are as the previous IR is having the "desired" effect and making us all save.
Give me a break. What a load of....
14. sirgoogle said...
Sorry that should have been the ECB not BoE.
15. Mjchum said...
When they say 'savings', what does this include? For example, cash savings, ISA's etc, shares? pensions? gold? futures contracts? other currencies held in British banks? There's a lot of very rich people around, so considering the distribution of wealth in this country, the majority have no savings at all. Who knows whats what anymore? IT'S ALL A CROCK OF . . . !!!
16. Nohpc said...
And next year property porn will be replaced by savings porn .. it's already happening.