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Brits Draw Down Record Amounts Of Savings To Cover Rising Cost of Living

Tyler Durden's picture




 

In the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding savings, Yahoo UK reports that households are pulling money out of their savings accounts at the fastest rate in modern record, according to Bank of England figures. Since the recent recession began, millions of workers have suffered repeated effective pay cuts as inflation has outstripped pay rises, and while consumer spending was one of the main contributors to the sharp rise in gross domestic product in the third quarter, "consumer strength usually reflects increased borrowing but this hasn't been the key factor recently."

In the year to October, the amount of cash in time deposits and cash ISAs fell by 4.7%, while the amount families have in their instant access current accounts or in their pockets rose by 11.2%. This inflationary shift of cash is the biggest since comparable records began in the 1970s.

 

Via Yahoo UK,

In the past year, families have withdrawn £23bn from their long-term savings accounts to convert into cash and put into current accounts - the equivalent of around £900 for every household in the country.

 

It is the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding their savings accounts.

 

...

 

According to economists, the shift of cash is the biggest since comparable records began in the 1970s, and reverses much of the sharp increase in saving that happened at the height of the recession.

 

On Thursday, the Chancellor's Autumn Statement is expected to focus on measures to help households deal with the rising cost of living, including energy bills.

 

Since the recent recession began, millions of workers have suffered repeated effective pay cuts as inflation has outstripped pay rises.

 

...

 

Consumer spending was one of the main contributors to the sharp rise in gross domestic product in the third quarter, and a further strong increase is implied by the Bank's money figures.

 

But while the figures suggest that the economy is strengthening, they will also be taken as further evidence that savers are being deterred from putting money aside by record low interest rates.

 

...

 

Some also suspect that with households still facing a significant squeeze as a result of higher living costs, many are having to dig into their savings in order to afford day-to-day items.

So the UK economy is surging and being lauded as evidence of QE's efficacy but the reality is inflation is eating away at people's wealth and hot money flows have caused the cost of living to rise dragging out the mainstay of future growth - savings - to meet consumption needs today. How long before government inflation data reflects this?

 

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Tue, 12/03/2013 - 11:46 | 4210096 smlbizman
smlbizman's picture

unpossible.....

Tue, 12/03/2013 - 11:49 | 4210102 LawsofPhysics
LawsofPhysics's picture

indeed, the central bankers already told us that there is "no inflation".

 

Tue, 12/03/2013 - 11:52 | 4210129 NoDebt
NoDebt's picture

When your income is falling, everything feels like inflation.

Tue, 12/03/2013 - 11:58 | 4210172 Clint Liquor
Clint Liquor's picture

When the price of everything is rising (except for your income) everything feels like inflation.

Fixed it for you.

Tue, 12/03/2013 - 12:07 | 4210226 Occident Mortal
Occident Mortal's picture

Don't worry, QE money will trickle down. Right after inflation renders it worthless.

Tue, 12/03/2013 - 13:01 | 4210489 666
666's picture

I had a dream. All the english speaking people rebelled in their respective countries and overthrew their governments, drawn and quartered the banksters, and elected fair and honest people to represent them and obey their Constitutions. I creamed in my pants, being so happy. Too bad it was only a dream and will never happen...

Tue, 12/03/2013 - 13:22 | 4210566 Occident Mortal
Occident Mortal's picture

Brits will just lie down and take anything their government throws at them.

Only once they are completely backed into a corner do they do anything and even then they don't come out the corner swinging they just reappear behind you and stab you in the neck.

That's how they beat the Spanish Armada, that's how they won the Battle of Britain, that's what they did to Gaddaffi when he reached Bengahzi.

Tue, 12/03/2013 - 12:05 | 4210186 nope-1004
nope-1004's picture

Your income is flat or marginally rising, but your dollars are being debauched and destroyed at a faster pace.  Problem is not a falling income, but a faster falling currency.  Interest rates are the price of money.  Compare it to the price of your car..... if your car became worth zero, would you value it?  Money is no different.... zero percent interest rates are a value figure placed on money, and since it is sending the signal that money is worthless, asset bubbles are poppinig up everywhere as the liquidity chases yield, causing inflation.

Incomes are not the problem.  Debauched currency is.

 

Tue, 12/03/2013 - 12:09 | 4210235 Occident Mortal
Occident Mortal's picture

When interest is artifically low, people are forced to consume the principle.

Tue, 12/03/2013 - 11:57 | 4210149 nope-1004
nope-1004's picture

This is a result of a failed gamble the FED took.  Greenspan even said on TV:  QE > stoke stawks > lower interest rates > consumer loans increase > consumer confidence increases > spending and economic activity increase = RECOVERY.

Except, he forgot one thing.  Every natural course has a natural limit.  Zero interest rates and no borrowing is a HUGE signal that the capital destruction from valueless money is not turning on the consumer.  In fact, it is turning them away because of the hidden inflation we see today.

QE is a back door bailout of the large banks, but sold to the public as "stimulus".  Here we are 5 years on and it's clear who the beneficiaries of QE have been.  The only thing that will change this idiotic, failure of a policy is if the people of this country wake up and demand a change.

Problem is the average person is stupid.

 

Tue, 12/03/2013 - 11:59 | 4210171 RaceToTheBottom
RaceToTheBottom's picture

When the riots start, people will be more motivated.

Tue, 12/03/2013 - 13:00 | 4210485 WOAR
WOAR's picture

When the people are starving, the people will be more motivated.

Riots only start when there are marches for bread.

Tue, 12/03/2013 - 13:26 | 4210594 asteroids
asteroids's picture

The UK has a long long way to go before they become Greece.

Tue, 12/03/2013 - 12:53 | 4210457 Hedgetard55
Hedgetard55's picture

"Except, he forgot one thing."

 

Ah, just as the Krel forgot one thing... monsters from the id. Check my avatar to see what is coming.

Tue, 12/03/2013 - 11:48 | 4210105 madcows
madcows's picture

So, they're pulling money out of savings to cover inflation?  are they still buying crap or is it only for necessities?

Tue, 12/03/2013 - 11:55 | 4210152 max2205
max2205's picture

This is working out well....no depression call until no one has any cash....well played sir

Tue, 12/03/2013 - 11:58 | 4210174 mofreedom
mofreedom's picture

Well they sure as shit ain't gettin their teeth fixed!

Tue, 12/03/2013 - 12:09 | 4210231 tsouth
tsouth's picture

yep the donald trump tipex look is awesome

Tue, 12/03/2013 - 11:49 | 4210116 Bendromeda Strain
Bendromeda Strain's picture

yah - mebbe they just don't trust the feces factory banks with them thar excess reserves...

Tue, 12/03/2013 - 11:50 | 4210117 TheFreeLance
TheFreeLance's picture

But I thought pulling consumption forward was a good thing. It can go on forever, right?

Tue, 12/03/2013 - 11:50 | 4210123 Sudden Debt
Sudden Debt's picture

depend on how many kids you have and if they speak English or not

Tue, 12/03/2013 - 11:51 | 4210119 Sudden Debt
Sudden Debt's picture

I LOVE IT WHEN A PLAN COMMES TOGETHER!

Tue, 12/03/2013 - 11:51 | 4210120 williambanzai7
williambanzai7's picture

Don't they have Britcoins yet?

Tue, 12/03/2013 - 11:55 | 4210146 Tijuana Donkey Show
Tijuana Donkey Show's picture

Can you redeem Britcoins for dental care? The mind shudders

Tue, 12/03/2013 - 13:06 | 4210514 Emergency Ward
Emergency Ward's picture

I always thought there was something crooked about Britcoins.....

Tue, 12/03/2013 - 11:53 | 4210134 FieldingMellish
FieldingMellish's picture

What inflation? Outside of food, energy and housing there is very little inflation. iPads are getting smaller and faster... be happy... and give your assets to your masters.

Tue, 12/03/2013 - 13:05 | 4210511 Emergency Ward
Emergency Ward's picture

Big screen TVs are cheap in Venezuela.  If you can find one.

Tue, 12/03/2013 - 11:56 | 4210162 FieldingMellish
FieldingMellish's picture

I think a large number here caught it out as being fiction.

Tue, 12/03/2013 - 12:03 | 4210193 Skateboarder
Skateboarder's picture

I started cursing the moment I found out there was a money drive behind the essay. What a crock of shit.

Tue, 12/03/2013 - 12:00 | 4210154 yogibear
yogibear's picture

LOL, the Central Bankster criminals are having their lies come back to bite them.

I thought they said inflation was non-existent.

Impoverish the 99% will you to enrich the 1%.

Bernanke and Yellen we know how this ends from history. 

Tue, 12/03/2013 - 11:56 | 4210160 Agent P
Agent P's picture

They've got to pay for those sets of commemorative royal baby plates somehow.

Tue, 12/03/2013 - 11:58 | 4210161 max2205
max2205's picture

Fish and SNAP coming to a pub near you.....

Tue, 12/03/2013 - 12:02 | 4210196 Inthemix96
Inthemix96's picture

Let me say it again bitchez, Northern England checking in here peeps.

Diesel £1.49.99 a Litre, gas and electric charges up 36% in ONE YEAR, 2 liters of milk (just under 4 pints) £1.69.99, ONE packet of 'Turner' rolling tobacco 50g £15.79.99.

Just four off the top of my head things that spring to mind, as each one effects me, as well as others like.

We are all being crucified on the altar of greed here folks.  As we enter the holiday season I would urge all of us, those who can anyhow to keep an eye out for older more vulnerable members of our communities, as by the looks of it, they are going to need our help.

Tue, 12/03/2013 - 12:07 | 4210227 Seasmoke
Seasmoke's picture

Speak American please. How much are things going up ???

Tue, 12/03/2013 - 12:14 | 4210268 Inthemix96
Inthemix96's picture

Sorry Seasmoke, I keep forgetting that currency thing.

One example is diesel is in your money almost $12 dollars a gallon, (if my math is right).

50 grams of rolling tobacco is $20 dollars more or less.

We are being murdered alive mate.  As well as a 36% increase in heating costs for just ONE year.

Brutalisied is better suited I believe.

Tue, 12/03/2013 - 13:04 | 4210506 Colonel Klink
Colonel Klink's picture

Sodomized is better suited I believe.

Fixed it for you.

Tue, 12/03/2013 - 14:49 | 4210927 Ayn NY
Ayn NY's picture

It's about $10 a gallon. That's over double that in the US.

Tue, 12/03/2013 - 15:27 | 4211081 LawsofPhysics
LawsofPhysics's picture

I would be happy to enter into an arrangement with you to exchange physical english pounds for rolling tobacco.  I find this amazing as the cost to produce tobacco has made this a break-even effort at best.  The pecan and walnut producing property has been great, soybeans too (all things asians love,  hhmmmm...)

Tue, 12/03/2013 - 12:28 | 4210333 Kirk2NCC1701
Kirk2NCC1701's picture

1 US gal. = 3.8 L
1 lb = 454 gr.
1£ = $1.??

You do the arithmetic. You got gr.5, right?

Tue, 12/03/2013 - 14:47 | 4210921 Ayn NY
Ayn NY's picture

£1 has gone from $1.52 six months ago to $1.64 today.

Tue, 12/03/2013 - 12:09 | 4210234 mofreedom
mofreedom's picture

Sorry, I gave at the office.

Tue, 12/03/2013 - 12:15 | 4210271 Agent P
Agent P's picture

If you quit smoking that would put some of those funny looking L's back in your pocket. 

Tue, 12/03/2013 - 12:18 | 4210288 XAU XAG
XAU XAG's picture

@Inthemix96

 

Just wait untill after the election..............Tax Rises Galor!

Tue, 12/03/2013 - 12:25 | 4210328 Inthemix96
Inthemix96's picture

XAU XAG,

Cheers mate, now I feel as depressed as fuck, fuck it, I'll have a few beers and post obscenities on the interwebs.

:-)

Tue, 12/03/2013 - 12:31 | 4210351 XAU XAG
XAU XAG's picture

Inthemix96

 

Facts are facts...................UK is BROKE!

 

You would be better getting an allotment! Or is you have the grounds around your house dig it up and get planting.

 

Notice they don's build houses with enough ground to feed your self??

 

Take care ...............and the cold weather going to hit you first ............Just to cheer you up Lol

Tue, 12/03/2013 - 12:43 | 4210411 Inthemix96
Inthemix96's picture

Oh we are broke mate, well broke, but it doesnt stop the inbred peodophiles from the square mile and the houses of parliament from piling the fucker on even more.

People are wising up fast though, I suppose is some comfort, and a big hearty yes to growing your own my friend, I live in an old pit village and it has been this way, doing it for yourself (as well as others) since jaffa was a tangerine.

Take it easy friend.

Tue, 12/03/2013 - 12:04 | 4210207 tsouth
tsouth's picture

What if this is connected to the embryonic bull market in housing, supported by government schemes, which means people are using their savings from the past 5-10 years to finally take the plunge and buy a house, having waiting donkey's years for a house price crash, and now belatedly realising there's a long way to go before the government will be unable to prevent that. In the meantime, it looks as if there's been a massive draw down of savings, whereas the figures for mortgage approvals are the highest they've been since 2007. Even with partial government support for the initial house deposit, that still a lot of 10's of thousands of pounds people are having to fork out to get a house- THAT counts as a savings draw down does it not?

Tue, 12/03/2013 - 12:23 | 4210306 XAU XAG
XAU XAG's picture

@tsouth

 

Prob a mixture of both

 

Draw down to cover in flation and drawdown for other investments rather than sitting getting Zero percent.

 

The banks lose to much deposit and QE will have to be increased devalueing the £ even more

Tue, 12/03/2013 - 12:07 | 4210223 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

To the average British voter,if the kids had to be sold to pay for the Sky TV(Premier League football, soaps,X-Factor,Britains Got Talent,Celebrity Come Dancing) subscription,the latest smart phones,the wife and remaining daughters on the game to pay for take aways, White Lightning cider and fags, as long as their house keeps going up in price(not value), they are happy.

The central bankers and politicians know this,if they didn't like being screwed,they wouldn't keep coming back each election time to vote for it all over again would they?

Tue, 12/03/2013 - 12:15 | 4210267 Calculus99
Calculus99's picture

More evidence, if it was needed, tha the EXPONENTIALS are catching up in the economy.

Sorry but you can't have multi year 3%-7% rises in necessities ABOVE INFLATION (utlities, transport, food, accomodation) without something giving.

Expect things to start to bite EVEN HARDER. It's the maths, no escaping that....

 

Tue, 12/03/2013 - 12:21 | 4210285 Calculus99
Calculus99's picture

On the point of EXPONENTIALS.

I've been waiting  for the last few years to see the problem mentioned on the (quality) news or in papers but I've neer seen it.

Nobody seems to believe it in property land, especially London. They all think that property can easily rise by 7-10% ever year FOREVER.

Will some commentator have a) the balls to mention it, or b) even the intelligence to mention it in 2014?

Tue, 12/03/2013 - 12:28 | 4210334 iLiquid
iLiquid's picture

From the country that gave us Keynes...

Tue, 12/03/2013 - 12:33 | 4210357 Kirk2NCC1701
Kirk2NCC1701's picture

Sorry to sound like a broken record, but it truly is time for the Sheeple to swap their fake/BS, socio-political models of reality for what's actually happening:

The Feudal Elite are coming back after 100 years. Plan accordingly. "You son of a window-dresser."

Tue, 12/03/2013 - 12:41 | 4210399 flyingpigg
flyingpigg's picture

I'm also withdrawing savings but not to pay for rising costs of living but to buy assets. Big rotation out of fiat Bitchez!

Tue, 12/03/2013 - 12:48 | 4210434 johnnyarrowmaker
johnnyarrowmaker's picture

So this means that ....

The banks are becoming less capitalised ...

meaning lower interest rates are needed ...

which means more withdrawals.

So the crazy idea of punishing savers by zero % interest rates is making tha banks more insolvent, not less.

Masters of the universe? or too much greed?

Tue, 12/03/2013 - 12:59 | 4210476 Zero-risk bias
Zero-risk bias's picture

The price of milk is getting a bit out of hand. I guess the cows are raking it in.

Did anybody here the UK is up for having another country take over and manage it's nuclear industry? Safe as milk! We all cool with that?

 

 

Tue, 12/03/2013 - 13:36 | 4210629 robertocarlos
robertocarlos's picture

It's not over until people strart moving back to the old country. Except they become trapped in the new shithole.

Tue, 12/03/2013 - 13:49 | 4210680 ItsDanger
ItsDanger's picture

Dont worry: deflation is on the way.  LOL

Tue, 12/03/2013 - 14:09 | 4210766 Sandmann
Sandmann's picture

Once they take away your interest income you spend capital..........if they devalue the currency by 30% and slash interest rates to 0.2% on savings and raise energy costs 10% annually it is hard to make it work when wages are frozen or capped at 1%

Tue, 12/03/2013 - 14:43 | 4210902 Ayn NY
Ayn NY's picture

I've been living in London for the last six months and I'm still shocked at how expensive everything is - and I moved from NY. That being said, I feel like I'm living in a more vibrant economy. I suspect all the building and general activity is fueled by foreign money and Euro flight, but the general feeling seems more like NY in the 80s and 90s.

Tue, 12/03/2013 - 15:37 | 4211138 10mm
10mm's picture

I wonder if any Brits buried their guns and ammo before that dreadful turn in? Same with the Aussies.

Tue, 12/03/2013 - 15:51 | 4211199 smacker
smacker's picture

People have finally wised up to the truth that the Cameron govt has failed to keep its promise for savers before the 2010 election. Telegraph article of last week reminds us: http://www.telegraph.co.uk/finance/personalfinance/pensions/10457090/Cam...

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