The Savings Index – previously known as the Savings Barometer – measures the population’s current view of saving and of future saving prospects, taking into account how people feel about the current economic climate.

The Index also looks at how regularly people save, and whether they feel they are putting enough money aside.

The index, which started at 100, is currently at 73, which, according to Nationwide is an indication of the current economic climate. Commenting, Martin Gahbauer, Nationwide’s senior economist said:

“The fall in the Savings Index indicates a significant worsening for household savings in March.”

According to Mr Gahbauer, the falling index is also a reflection of households’ moves to pay off debts such as their mortgage more quickly, as the more money that is used for debt, the less is available for savings accounts.

He also blames the six consecutive interest rate cuts in the last six months, saying they, “have had a significant and perhaps unintentional impact on the savings habits of UK households.”

However, despite these factors, Mr Gahbauer remains shocked by the low Index: “It is surprising that the Savings Index is so low. In uncertain times, money needs to be put aside and if people are unable to do so or choose to use their money in another way, the savings buffer of UK households may be insufficient to deal with the consequences of the economic downturn.”

Compare savings account deals »

© Fair Investment Company Ltd