The proportion of household income being saved rose significantly in the final three months of 2008, official figures suggest.
According to an update by the Office for National Statistics (ONS), the current 'savings ratio' is at its highest since 2006 as homeowners tighten the purse strings.
As part of its revised figures, the ONS adds the UK economy shrank even more than expected in the last three months of 2008.
It says the economy shrank by 1.6% compared to the third quarter, the biggest fall in GDP (gross domestic product) since 1980 and more than an earlier estimate of 1.5%.
The 'savings ratio' surged from a negative number in the first quarter of 2008 to almost 5% by the end of the year, the ONS says, with a noticeable rise in the last three months of the year.
The findings correspond with a recent survey carried out by National Savings & Investments (NS&I), which suggested people are now saving an extra £3 a month than they were a year ago.
According to the ONS, the savings ratio has also been boosted by people borrowing less, with a slump last year in new mortgages, and consumers reining in their spending on credit cards and other types of borrowing.IFAonline
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