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Saving Outpaces Spending For The First Time In 20Year

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Families saving more money than borrowing for first time in 20 years
Philip "The Bald" Aldrick and Myra Butterworth, 22:12, Thursday 24 June 2010
Families are banking more money than they are borrowing for the first time in more than 20 years, a Bank of England report shows.
Households last year put £24 billion into deposit accounts and took out £20 billion in new loans. It is the first time since 1988, when the current records began, that savings exceeded new borrowing.
The statistics relating to families reflect a culture of austerity that has also dominated public finance policy. The Chancellor unveiled the biggest cuts to public spending for almost a century in this weeks Budget. Combined with £29 billion in annual tax rises, the Governments own figures suggest that individuals earning £50,000 will be £1,600 worse off within two years, while the average citizen will be £400 worse off.
Leading economists said the recent recession the worst for 60 years meant households had become increasingly concerned about paying their debts.

If consumers cut back on spending it will have a huge impact on jobs and prices. Is this not what happened in Japan when the housing bubble burst--people just stopped spending and began saving large amounts of cash which is the best place to be in a deflationary environment.

This may be the trigger to take down the housing market. Who is going to move up in the market when austerity is dominating thought patterns. FTBs have long given up and the others at the low end will just stay on at their Mooms and Dads.

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