Britons 'forced to dip into savings'

Many Britons were forced to use their savings to cover raised living costs and tax increases during the first quarter of the year, a survey has shown.

At the end of March the average person had £1.783 saved for a rainy day, which is £100 down on the same period last year and 12% lower than at the same time in 2009.

ING Direct bank, which commissioned the survey, blamed the savings fall on people having to shoulder more expensive day-to-day costs.

Results revealed that 41% of those questioned used their savings to pay for essentials like food and fuel.

Fear over job losses is also having an effect on people's savings as they siphon off their spare cash into reducing debts instead as they look to improve their financial security.

Around 18% used their savings to pay back borrowings, while 15% revealed they were not confident about keeping their job, a proportion last seen during the recession towards the end of 2009.

Richard Doe, chief executive of ING Direct, said: "The positive news is that nearly a third say that they are determined to build up their savings later in the year and if the economic situation improves they will be in a much better position to do this."

The research found that young people and those on low earnings were most likely to use their savings.

The average saving level for people aged 18-24 dropped 40% over the past year to £496. Savings levels of those earning less than £22,000 a year fell 21% to £595.

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