Context

‘Nations of Savers’ is one of the five Agendas for Change that the Money and Pensions Service identified in its UK Strategy for Financial Wellbeing 2020-2030. The goal of Nations of Savers is to increase the number of Squeezed and Struggling working-age adults who are saving regularly by two million, by helping people to build a savings habit.

Prior to the COVID pandemic, two-thirds of UK households had some savings. However, amongst those identified as Squeezed and Struggling, only 57% (14.7 million) were saving or investing regularly. It is uncertain how the impact of Covid-19 and the policies introduced to control the spread of Covid-19 may have impacted progress against the goal.

The study

The report summarises evidence published between 1 July 2020 and 31 March 2021 on the economic impacts of COVID-19 and how these are likely to have affected savings behaviour in the UK.

The search included research from government and organisations known to publish research on savings. Expert recommendations for relevant literature were also received from academic colleagues researching the impact of COVID-19. The evidence considered was drawn from a range of sources, including organisational sources, practitioners and stakeholders and included grey literature from financial companies and the financial press.

Key findings

Since the start of the pandemic there had been an increase in the amount of household income being saved, due in part to lower expenditure that some households had experienced. Households in the top income quintile were three times more likely to have increased their saving than those in the bottom quintile.

High-income households were saving more but there was a more mixed picture among financially vulnerable. Low-income households were more likely to report reducing savings balances or to be relying on savings during the pandemic. Some previously financially secure households, such as the self-employed, and workers on insecure contracts were falling into financial vulnerability. Most key workers were able to save but negative saving outcomes were noted for parents, renters, younger people, people from ethnic minorities and people with disabilities. Among women who were in a position to save and younger people, attitudes towards saving had become more positive.

There is potential to build on the savings habits developed since the start of the pandemic, especially among younger people. Households which had previously been resilient but were impacted negatively by the pandemic were expected to find it difficult to restore their savings unless there was sustained recovery in the economy, and particularly employment.

Points to consider

• Although the paper is subtitled as a rapid evidence review, the few methodological details provided suggest that the systematic or quality assessment elements that are typical of rapid reviews were not employed. The authors describe it more accurately as a summary briefing.
  • The literature search was reportedly targeted on known organisational sources and did not apparently include a wider search of peer-reviewed academic databases, preprint servers or generic Internet search engines. This suggests the summary was partial.
• The summary is likely to be incomplete and, with the exception of official statistics, the limited scope of the search strategy risks the evidence reported being biased by organisations which have partisan interests in the topics.