Britons have 'no money to cope with recession' as savings hit lowest level for 50 years
Spending culture: The country's love of shopping has led to low levels of savings
Britons are saving less than they have since records began in 1959.
Households put away only £2.6billion in the first three months of this year, down from £7billion in the previous quarter, an Office for National Statistics report revealed yesterday.
It suggests the economy is on the brink of recession, with growth from January to March only 0.3 per cent, the lowest level in three years.
Disposable incomes fell 1 per cent in the first quarter, leaving precious little to save. But household spending in the quarter rose 3 per cent on the same period last year, to £196billion.
With savings only 1.1 per cent of total incomes, experts warned Britons to abandon their ‘live for today’ habits and conserve more cash.
Economist Peter Dixon, of Commerzbank, said: ‘Households are assuming the good times can go on for ever, and they can continue to spend without worrying about what will happen to their incomes. They are going to have to tighten their belts.’
The first quarter figures also showed incomes are being eroded by a jump in interest payments and the highest personal tax burden since the start of 1987 - up 8.6 per cent on the same period last year.
Jonathan Loynes of Capital Economics said the figures ‘underlined the severity of the threats facing the UK economy.'
He added: 'We now expect GDP growth to slow to just 0.5 per cent in 2009, with a very real chance of a technical recession.
'The fall in the household saving ratio from 3 per cent to just 1.1 per cent emphasised the threat to consumer spending as households tighten their belts in response to falling house prices.’
