THE typical proportion of income saved by households has halved over the last 40 years, according to research. Lloyds Bank found that households saved around 9.9 per cent of their income between 1974 to 1984, against a backdrop of rising interest rates which reached double digits for the first time in 1979.
But following five years of the Bank of England base rate sitting at its historic low of 0.5 per cent, households are now saving around 4.8 per cent of their incomes.
In 1980, households were putting a peak of 12.3 per cent of their incomes away, but the savings ratio declined rapidly during the noughties decade, fuelled by rising levels of consumer spending and borrowing.
Lloyds said that low interest rates helped to reduce "the perceived need for households to hold precautionary savings".