Squeeze on savings hits an all-time high as 40pc have no spare cash
THE number of people who are unable to save because they are too short of money has hit an all-time high.
Four out of 10 people now say they are not able to save because they have nothing to spare every week.
And the number reporting a shortage of spare funds that would otherwise be put away for a rainy day is across all age groups, according to a survey conducted for Nationwide (UK) Ireland.
Those surveyed said they were using spare funds to pay debts rather than saving in banks and credit unions.
Lenders are desperately scrambling to get a slice of the €92bn households have on deposit in banks and credit unions by outbidding each other with attractive interest rates.
And although rates have been falling in the past few months, they are still attractive, according to market observers.
Some banks, among them EBS, Ulster, Permanent TSB and AIB, are offering 4pc interest to monthly savers.
Nationwide UK (Ireland) managing director Brendan Synnott said various factors were coming together to make it more difficult for people to save.
The latest Nationwide UK (Ireland)/ESRI Savings Index, published today, indicated that 43pc were not saving at all.
It is the highest level of non-saving recorded since 2010, and up from 35pc on last year.
Among the under-50s fewer than a third of people were not saving, and among the over-50s, half said they were not putting any money away.
"The economic environment has become less favourable towards saving as evidenced by reductions in deposit interest rates by numerous institutions, including ourselves," said Mr Synnott.
"The deposit interest rates being paid in the market are not sustainable and it is likely that interest rates will fall further over the next year."
He added that the level of tax on savings also increased during the year, making the return from savings less attractive.
"At the same time, the majority of people who have spare funds available are using them to pay down debt, possibly because there is less credit available," he said.
The Nationwide /ESRI Savings Index also asked people what they would do with extra money -- and only 8pc said they would spend it, with the rest allocating it to pay debts or save.
"On a more positive note, people now seem to be less fearful about what the future holds and their ability to save in the future," Mr Synnott said.
A survey earlier in the week found that 1.8 million people have just €100 left each month after paying essential bills.
The Irish League of Credit Unions research found that four out of 10 people were being forced to borrow for electricity and grocery bills.