New data has shown that Britain is now Europe’s savings champion.
Raisin, a savings platform, found that Brits have been saving more money since the pandemic.
A total of £81billion was stashed away in savings accounts in the first half of 2021 – the highest amount ever saved during a six-month period.
Savings boom: Deposits have increased in Britain since the outbreak of the pandemic. Savers have seen their bank balances rise by 17% between June 2020 – June 2021.
In the meantime, the average pace at which savers in the eurozone are increasing their bank balances is slower than at the beginning the pandemic.
The UK has seen a rapid increase in savings habits since the pandemic. Savers have increased their balances by 17% between June 2020-2021.
This was almost three times faster than the UK, as eurozone savers grew deposits by 6.5 percent.
While European counterparts have reduced their savings habits, British savers show no signs of slowing down, even after the removal of Covid-19 restrictions.
Savings in the UK increased by an extra five per cent over the first half of 2021 compared to the same period last year with British savers boosting their balances by £1,237 on average.
In the UK, deposits have grown at an accelerated pace since the start of the Covid-19 pandemic, with savers increasing their bank balances by 17 per cent between June 2020 and June 2021.
In contrast, savers from the euro-area only grew theirs by an average of £691 per person during the same period.
The European Central Bank, Bank of England, and the Federal Statistical Office, Eurostat, and Barkow Consulting data were used in the analysis.
France’s savings trend actually fell in the first six months this year. Net inflows dropped by four percent.
Tamaz Georgadze Co-chief executive of Raisin DS.
Even though Germans are known for being disciplined and prudent when it comes to managing money, they were unable to keep pace with the British savings surge. Deposit inflows increased by 2.9% between January and June.
Dr. Tamaz Georgadze co-chief executive of Raisin DS stated: ‘Savers in the UK have been putting aside more money since the Covid-19 crises began and have now displaced German counterparts to become the largest savers across Europe.
“However, British savers are in a similar boat as their European counterparts, earning little or no interest on their savings.
“With inflation on the rise, and the continent slowly opening up, it may be more difficult for people to save as much as before.”
How does our savings rate compare?
Despite the fact that UK savings rates are at an all-time low, they seem to be more favorable than those in other European countries.
Moneyfacts shows that the average UK fixed rate is 0.76 %, while the equivalent in Germany is 0.24 %, according Raisin’s analysis from Kritische Anleger.
This means that a UK saver who invests in a 1-year fixed rate agreement will earn more than three times the interest as a German counterpart.
The average £10,000 deposit in a British one year fixed rate deal will earn £76 after one year whereas in Germany it would earn £24.
Despite the fact that some of the UK’s largest banks pay almost nothing in Europe, there has been competition among UK’s challenger bank to ensure British savers have the best rates among European countries.
Savers can access the best bank offers in Scandinavia, Italy, or the UK to reduce the worst effects of inflation on savings.
Raisin’s analysis shows that the UK offers the highest rates for savings deals of one- and three-year durations, compared to Sweden, Germany, and Poland.
However, there are concerns about the possibility that savers in Britain may lose faith in saving because of rising inflation.
The UK, Italy, and Scandinavia are the markets with the largest spreads between the interest rates at big banks and the highest rates available.
Inflation fell to 3.1% in September but is expected to rise to 4.0% in the next few months, as highlighted by Chancellor Rishi Sunak in his Budget speech.
However, there is a possibility that inflation will be temporary. UK savers should take advantage of some deals offered by challenger banks or lesser-known names in savings.
At the moment, the market-leading easy access deals pay 0.65 %, while the leading one year fixed rate deal is currently at 1.45 %.
Raisin UK co-founder Kevin Mountford said that while rising inflation can deter savers, economists believe that any peak in inflation will be temporary.
“As such, UK customers should continue to have positive savings habits and take advantage some of the relatively high rates currently available on the market.”