Since the first wave of research in May, abrdn's Savings Ladder Index has shown a notable rise, with the propensity to save amongst UK adults increasing by 2 points to 55/100 and the propensity to invest rising by 3 points to 40/100.

The overall score now stands at 49/100, up by 4 points. This improvement is largely attributed to enhanced consumer confidence following the General Election and a more optimistic economic outlook.

However, this doesn't show the full story. An intergenerational divide is emerging, with the increase in propensity to save and invest driven by young people aged 18-34, who have posted a double digit increase in confidence.

Confidence among 35-54 year olds, in contrast, has increased by just a few percentage points. For those aged 55 plus and the retired it has remained largely static and, in some cases, even reversed. This comes ahead of the Autumn Budget, with fears around pensions, capital gains tax and inheritance tax increases at fever pitch.  It is also set against the backdrop of a more limited Winter Fuel allowance. 

Budget caution

abrdn is therefore cautioning the Government against unveiling policies in the upcoming Budget at the end of the month that could both dampen this nascent appetite for saving and investing, and indeed penalise those who have saved and invested to build financial resilience. 

Sarah Moody, Chief Corporate Affairs and Sustainability Officer, abrdn, said: “It’s hugely positive to see growing appetite for saving and investing, particularly amongst younger investors. This is a crucial step in shoring up people’s long-term financial resilience. 

“But nor should we leave behind those who have carefully saved and invested over many years.  We must now cultivate these green shoots of progress into a national culture of saving and investing for the long-term. We urge the Government to use the Budget as an opportunity to continue building on this positive trend rather than dampening nascent appetite for saving and investing by eroding the benefits of doing so.” 

Policy changes

To foster a culture of saving and investing, abrdn recommends several policy changes:

abrdn anticipates that the Bank of England will cut its policy rate in November, with further reductions expected until it reaches 3.75% by the end of 2025. However, abrdn also foresees potential tax increases in the upcoming Budget, including higher capital gains tax and reduced pension contribution relief, which could dampen the growing appetite for saving and investing.

Paul Diggle, Chief Economist at abrdn, emphasised the delicate balance the Government must strike: “The Government is walking a difficult tightrope – needing to raise revenues for investment while also being conscious of the impact tax increases could have. Consumer confidence and people’s willingness to save and invest seem relatively fragile, so any changes should be carefully considered.”

As the Government prepares for the upcoming Budget, abrdn urges careful consideration of policies to ensure they support, rather than hinder, the burgeoning interest in saving and investing.

Propensity to save and invest scores

The Propensity to Save score measures how well people understand savings products, their likelihood to save more or open new savings accounts in the next six months, and their confidence in managing these products.

The Propensity to Invest score assesses people’s understanding of investment products, their likelihood to invest more or open new investment accounts in the next six months, their confidence in managing investments, their prioritisation of long-term investing, enjoyment of investment-related reading, and risk tolerance.

The Economic Outlook score measures confidence in the UK economy, the UK stock market, and personal financial situations.
Respondents with a strong propensity to save and invest received a score of 100/100, while those unlikely to save and invest received 0/100. Similarly, a positive economic outlook was scored 100/100, and a negative outlook was scored 0/100.