There is a marked ‘savings gap’ between the North and South of the UK, with lower levels of financial resilience in the northern regions, according to new research.
Hargreaves Lansdown Savings & Resilience Barometer — identified the regions with the lowest and highest savings ratios. In July this year it found that 50 per cent of people living in Southern Scotland did not have the equivalent of three months wages in savings — the largest savings gap in the UK.
This was closely followed by Merseyside, where 49 per cent do not have these emergency savings to fall back on in an emergency, and Tess Valley and Durham and Devon, with the figure in these regions standing at 44 per cent.
Many of the regions with higher savings ratios where in the South of England. In Inner London (West) just 16 per cent of people failed to have three months salary in savings — the lowest proportion across the UK. Meanwhile outer London (west and north west) had a figure of 19 per cent, while in Gloucestershire, Wiltshire and in Bath and Brisol, only one in four of the population (25 per cent) did not have these rainy day savings. This indicates a far higher proportion of people in these areas are financially resilient.
Across the UK the 35 per cent of people do not have sufficient savings (equivalent to three months’ salary) to bail them out in an emergency.
Hargreaves Lansdown pointed out that other factors, aside from location, affect how likely people were to have built up this savings safety net. This includes income, home ownership, parenthood and their relationship status.
Hargreaves Lansdown head of personal finance Sarah Coles says: “There’s a yawning gulf between the savings ‘haves’ and ‘have nots’.
“Savings have been building since the onset of the pandemic, but while some people are sitting pretty on significant cash piles, experiences across the country vary dramatically, with people from Southern Scotland to Devon are struggling to build enough savings to protect their families. In some areas, around half of people don’t have enough savings to bail themselves out of an emergency.”
She adds that the baronets shows that over all the UK has become more financially resilient, when compared to pre pandemic data — and extra savings are responsible for most of the improvement.
“Around two thirds (65 pr cent) of households have enough emergency savings, compared to before the pandemic when it was less than half (47 per cent).”
Coles adds that income is a key factor when it comes to determining savings ratios, with those living in Southern Scotland and Merseyside, as well as areas like Devon and the Midlands, typically on far lower salaries than people living in London and across the home counties.
Coles points out that more than half of renters don’t have enough emergency savings (55 per cent). She says this will include people on lower incomes, but also younger people, who are facing runaway rents and can’t see any way to stretch onto the property ladder.
Single people also fall short when it comes to savings, and 49 per cent don’t have enough savings to be resilient. This reflects the additional burden of carrying the cost of running a household on one income.
Coles points out that having children takes a toll too. “Among couples with no children, only 21 per centfall short when it comes to savings, but that rises to 34 per cent among those with kids. Meanwhile, single people with children have the hardest of all worlds, and 74 per cent don’t have enough savings to be resilient.”