Petrol key to 'surprise' recovery

Lower petrol prices helped to fuel a "surprise" recovery in the nation's savings this summer, with balances reaching their highest in two years, a study has revealed.

The typical balance for ordinary Britons rose by 9.8%, or £182, in the second quarter of this year to reach £2,040, marking the third quarterly increase in a row, said the ING Direct consumer savings monitor.

But typical unsecured debts, including personal loans, overdrafts and credit cards, also crept up over the quarter, increasing by 3.8%, or £86, to reach £2,328, the highest figure since last autumn.

The study said that falls in fuel prices had been a key factor in enabling people to put more cash away in accessible savings, saving the average motorist around £93 across the quarter.

From April to June, the average price of a litre of unleaded fuel fell by 7% from £1.40 to £1.31.

Households have come under intense pressure from high living costs and high unemployment and many recent surveys have suggested people are dipping into their savings, many of which are giving poor returns, rather than taking out new loans amid the mood of economic uncertainty.

But there have been recent signs of a slight improvement in tight household budgets as inflation has eased.

Richard Doe, chief executive of ING Direct, said of the savings figures: "This marks a two-year high and represents the longest sustained rise in savings since we began tracking at the beginning of 2009. Given other gloomy economic news, it is also something of a surprise."

Researchers said that payment protection insurance payouts were also continuing to boost people's balance sheets, with two million people expected to receive average compensation of £2,600 this year, of which people plan to place around a third into savings.

The study - which quizzed 1,300 people - also found the eurozone crisis had led to people being more cautious with their budgets, with 15% of people surveyed saying they had saved more because of the problems in Europe and three in 10 saying they had been more careful about their spending.