Britons 'Should Save More', Insurers Say

Ministers must introduce new public campaigns to urge people to save more, insurance firms have said.

According to the Association of British Insurers (ABI), the recent economic downturn means that householders should save more and avoid debt as best they can - and that some form of official guidance is needed in order to make this the case.

It said that, with many people feeling the pinch, savings accounts were likely to be raided in order to meet day-to-day costs - a trend which could severely impact on personal finances.

Therefore, the body suggested that the annual tax-free savings limit should be raised from its current level of £7,200 - including £3,600 in cash - to £9,600. The ABI said that the cash cap should also remain in place, as this would encourage more savers to plough money in to longer-term, and less easily accessible, investments such as equities.

Figures from the ABI also show that unsecured debts - in other words, debts which are not backed by goods such as those for credit cards and personal loans - of over £20,000 are currently held by the average household. If secured debts such as mortgages are factored in to the equation, this total rises to over £100,000.