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Greed, Tax and Pensions Cause Savings to Falter
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According to figures from the ONS (Office of National Statistics), the ratio of savings to debt fell by approximately 2.1% in the opening quarter of 2007 from 3.9% in 2006, with an overall growth of just 0.7% in savings.
This is thought to be primarily due to the levels of employers' special contributions reducing following high payments into pension schemes in the previous quarter. The ONS also lay blame on an increase in personal spending, an increase in the overall personal tax burden and higher debt repayments caused by rising interest rates.
These levels equate to savings of only £40 per month, compared to £180 a month (based on a 2007 national average wage of approx £1,900) only ten years ago, when savers borrowed nearly 10% of their wage packet.
It is no wonder that more and more consumers are opting to borrow using credit cards and personal loans to pay for things such as cars and home improvements when savings rates are so low.
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