By Max Clarke
Levels of savings have plummeted, with just £6.1bn deposited in UK banks the first half of 2011, compared to £16bn for the same period last year.
Figures, made available by the British Bankers’ Association, also reveal the lending from banks to businesses remains muted, whilst mortgage lending saw modest growth.
Continued economic uncertainty, reinforced by declining disposable incomes for UK householders and rising cost of living, is reducing their potential to save and to spend.
“Personal deposits are growing only slowly as some people may be using savings to pay higher household bills,” commented BBA statistics director, David Dooks.
This lowered spending power is in turn affecting business, especially for retailers, who have faced continued decline.
“Businesses, as has been seen elsewhere, are concerned about the economic outlook and, in weathering difficult trading conditions, they are putting off expansion or investment plans and limiting borrowing,” continued Dooks.
As a result of reforms to the banking sector intended to curtail risk-taking behavior, banking has overall become more expensive. This has been matched by a hike in the cost of services offered, particularly in the form of lowered interest on savings and higher repayments for loans and mortgages.
Businesses have reacted by borrowing less and delaying investment in their companies, further prolonging economic recovery.
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