Following the financial crisis, there was a lot of talk from policymakers about rebalancing the UK economy. Unfortunately, this has not materialised and the UK economy remains unbalanced and the nature of recent economic growth is unsustainable.
UK households are saving less now than any other time since the mid-1960s. Currently, the average household saves less than 4% of its income per year. Although we are a consumer economy, it stands to reason that a higher savings rate would be a positive step towards a more balanced economy, one that would be capable of delivering long-term prosperity (not least because theoretically savings should equate to investment).
Upon emergence from the financial crisis, it was widely acknowledged that the UK savings rate was too low and despite considerable talk about the desire for a higher rate in order to reduce the UK’s vulnerability to shocks in the future, this clearly has not happened.