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Poorest 20% to remain in the red until 2020

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The poorest 20 per cent of UK households will be unable to afford to save until 2020, according to the latest Post Office Future of Savings Report.

Thanks to stagnant real wages and the rising cost of living the poorest households in the UK will spend £1,910 more this year than they will earn, the report has found. Meanwhile the richest 20 per cent of UK households will have an average of £18,680 to spare.

While the ‘savings gap’ will shrink slightly in 2015 – falling to £19,020 from a peak of £25,920 in 2010 – this is more on account of the richest families saving less as confidence in the UK economy grows rather than the poorest finding more to set aside.

Henk Van Hulle, head of savings and investments at the Post Office, said: “The poorest households remain in the red and without any chance of boosting their savings this decade. We are still in the midst of a savings crunch for a significant number of people – made all the more worrying as their outgoings continue to outstrip their income.

“Savings are predicted to drop on average for everyone in the UK in the next few years. It is clear that this problem needs to be addressed. Those who do have the ability to save should build up a buffer while they can – as even a ‘little and often’ approach can make a difference.”

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