Savings on the increase during the recession

The recession appears to have prompted people to save more but only a little more.

A survey of 13,000 savers carried out by ING Direct found that the average level of savings rose by £40 during the recession.

The average savings held by households stood at £2,205 last year, the equivalent of 1.7 months of take-home pay.

However, a majority of households chose not to use their disposable income to save but to reduce unsecured loans and to pay larger amounts on their mortgages.

Johan de Wit, chief executive at ING Direct UK, said: "Britons spent much of last year cutting down on debt and getting their finances in order.

 "The psychological impact of the recession also seems to have made the public more credit averse and more cautious when it comes to spending."

Despite the greater frugality encouraged by the economic downturn, average savings are still minimal.

Mark Cliffe, the ING Group chief economist, said: "The ING Direct consumer savings monitor shows the meagre level of readily accessible savings that most people have. This leaves them with a very small buffer if they run into trouble.