British savers have been removing cash from their savings accounts at the fastest rate seen since nearly 40 years ago.
According to the Bank of England, £23 billion has been withdrawn from long-term savings in the last year. This works out to be the equivalent of £900 for each household.
The money removed was either spent straight away or moved into current accounts.
While sitting in savings accounts, the majority were gaining little more than 1%. Some observers believe the low interest rate provided the impetus to put the funds to use as families felt the pinch of high inflation and low wages.
Analysts also believe that spending the money on consumer goods may have been one factor in the revival of the economy, while expressing concern that it might undermine recovery.
Experts have urged the Chancellor to provide financial incentives for savers, as these have been absent in recent times. A former Downing Street adviser said that no economy can thrive in the long term without people saving.
Consumers increased their saving sharply during much of the credit crisis. In the year to October 2009, the amount put into long-term savings rose by £13.9 billion, the Bank said.
In the year to Oct 2012, £24.8 billion was added to savings accounts overall. But long-term savings fell by almost the same amount, a 4.7% decline, in the year to October 2013.
