UK Families Saving Nine Times Less Than Families in China

    MANCHESTER, ENGLAND, February 25, 2012 /24-7PressRelease/ -- Although forecasters suggest the Chinese trend will fall back, at the current time the gap between the UK savings ratio and that of China has never been wider.

- German families are saving double of what is saved in the UK
- The average UK household has an average of GBP5k in savings, in China the average household has savings of GBP19k
- UK adults are four times more likely to financially struggle than Chinese adults

So how much savings do UK families have and how does this compare to Germany and China? The UK household savings ratio, (saving proportion of a consumer's disposable income) has seen a downward trend over the past decade. However during the recession (as consumer credit was squeezed), this stepped up to around 7% and is forecast to remain broadly flat in the near future. The savings ratio in Germany has been much more consistent in recent years, at around 10% and is expected to remain stable.

In China, however, the savings ratio - already far higher than that of the UK or Germany at the start of the millennium has soared in recent years, rising from 27% in 2001 to an incredible 47% last year (2011). The high level of household savings in China largely reflects the lack of the social safety net (e.g. state pensions and benefits) leading to a higher precautionary motive to save than in Germany and the UK.

Although forecasters suggest the Chinese trend will fall back, at the current time the gap between the UK savings ratio and that of China has never been wider - with the Chinese now saving a proportion of disposable income around nine times higher than the proportion saved in the UK.

What this means in reality?

The survey data shows that China's high savings ratio is matched by a very widespread prevalence of saving, with only 3% (around one in thirty) Chinese adults having no form of savings, investments or pensions wealth at all.** This means that UK adults are almost four times more likely to be 'flat broke' than Chinese adults - with one in nine (11%) UK adults owning no form of saving for the future whatsoever.***

Chinese savers also hold savings in a more diverse range of forms than those in the UK or Germany. While nine in ten Chinese hold savings or 'spare money' in accounts with banks and building societies, six in ten (58%) also save by stashing cash at home or with 'local' organisations, far higher than in the UK. The same proportion in China also claim to own some kind of stocks, unit trusts or other long-term investments - again, a much broader level of ownership than in the UK or Germany.

In money terms

The typical (median) UK Household has an average of GBP5,009 in savings and investments. This is around GBP3,600 lower than the typical German household, a little more than half. The typical UK household has only around a quarter of the amount in savings and investments owned by the typical Chinese household (GBP19,334).

Savings trends - a longer-term perspective

More households in all three countries have seen their savings increase than fall in the longer-term view. In the UK, Bank of England data shows that overall retail deposits have grown almost continuously throughout the post-war period, registering some rare quarter-on-quarter declines in recent times, but generally holding up and continuing to pursue an underlying path of growth.

Savings trends - in the past year

In the past year, the UK and Germany have seen a decline in their savings. Ordinary UK households' savings have taken the biggest 'hit' in the past year, falling by 11%, which equals around GBP600. German household savings also suffered, falling 5%, and ordinary Chinese households' savings continued to roar ahead, whilst gaining 7% on last year.

Motivations for saving

As financial family planning becomes more popular, the motivations to save has increased with more than nine in ten UK households having at least one household member taking the lead.

Similarly, around four in five UK households now have at least one person who obtains information and advice, either via seeking professional opinion and/ or the internet to get information, with 62% of UK adults now saying they have switched banks to get a better interest rate.

Comparing this internationally shows that Chinese respondents were the most 'pro-active' about switching, and narrowly the most likely to plan and information-gather. While most Brits (62%) and the great majority of Chinese (82%) say that they have switched between different financial services providers to get better rates, the majority (54%) of German households have never switched provider to get a better rate.

Furthermore, it has been suggested that in the UK, the amount of families 'budgeting'*** their finances on a weekly basis was just 56% before the recession hit home, but has risen to seven in ten (70%) of UK households since.

Greg Coughlan, Head of Savings at Lloyds TSB comments: "While these findings should perhaps not be surprising in view of the figures we have seen on savings ratios, they are still remarkable. Despite significantly higher income levels, today's British and German households are both being roundly beaten in the savings stakes by urban Chinese households.

"However, UK families seem to be getting more engaged with their finances and savings, so we would hope to see some of these figures improve further over time."

Notes to editors

*Interviews were carried out online by Research Now in early January 2012. In the UK, we interviewed 1,500 adults aged 18-64, and in China and Germany 750 adults aged 18-64, resulting in a total international sample size of 3,000. Broad age-group and gender quotas were set to match the profile of adults aged 18-64 in each country.

Results from our new survey research were set alongside data from a range of other sources, including the UN Population Division, Government Actuaries' dept., Bank of England, World Bank, Oxford Economics, and Future Foundation's proprietary trends resource, nVision.

**Respondents living in the major cities of Beijing and Shanghai represented around 35% of our survey sample (cf. c.3% of the total Chinese population). While the remaining 65% of the Chinese sample was spread fairly evenly across all regions of China, the great majority of respondents were living in urban areas within each region. Our sample may thus be described as broadly representative of 'urban China'.

*** This is based on the customer being solely dependent on their savings.

For more information contact:

Siobhan McCluskey, Lloyds TSB:
020 7661 4669 / [email protected]

Claire Barratt, Lloyds TSB:
020 7661 4668 / [email protected]

Website: http://www.lloydstsb.co.uk

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