Value of UK savings ‘has risen more than fivefold in last four decades’

The value of UK savings has seen a considerable increase in the last 40 years, but the proportion of income saved has fallen over the same period.

This is according to a new report from Lloyds Bank, which reveals that UK household savings now stand at an estimated £4.1 trillion, compared to £744 billion in 1975 in today's prices.

It represents a 452 per cent increase in real terms over the past 40 years, or the equivalent of an average annual rate of growth of 4.4 per cent.

Meanwhile, the average value of savings per household has increased by 294 per cent from £36,989 in 1975 to £145,566 today. In this time, real household income per head has also risen by 130 per cent.

Philip Robinson, savings director at Lloyds Bank, said this significant shift in the UK savings market over the last 40 years can be attributed to increased retail competition, the rise of digital banking and a greater emphasis on private pensions and 'tax-free' savings.

He said: "Despite witnessing three recessions during the period, in addition to rising levels of consumer spending and borrowing, real household savings have grown annually by an average of over four per cent and we would expect this to continue over the next few years."

However, despite these trends, the report also revealed considerable differences in the value of savings, with some households having little or no money put aside. Indeed, 36 per cent of UK households were found to have no savings, while a further 13 per cent hold savings and investments of less than £1,500 in value.

Meanwhile, the proportion of income saved by households has seen a significant drop. It averaged 13 per cent in the two decades to 1995 thanks to relatively high interest rates, peaking at 16.4 per cent in 1992, but fell to an annual average low of 5.5 per cent in 2008.

The figure now stands at six per cent, almost two-thirds lower than the 1992 zenith.