Govt ‘cannot promote' savings in douple-dip recession

Former special adviser to Chancellor Alistair Darling and Aviva group public policy director Sam White said in the context of the double-dip recession, the government had conflicting policy objectives to stimulate a recovery while switching away from an economy “built on debt”.

He said: “Within this context savings are good and they are bad. They are good for future pensions and paying down debt, but they are bad because they stop people immediately spending now on the high street, keeping the economy ticking over when it is stuttering.”

Policy Exchange head of economics Matt Oakley said it would be a “risky government” that advocated saving more in the current economic turmoil.

He argued: “The country cannot afford at the moment for people to increase their savings; around two-thirds of GDP growth is consumption growth. In the context of getting the economy going, we really cannot afford for people to start saving an awful lot more.”

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• Aviva