Consumer Savings Benefit the Economy

Tax and advisory services provider PricewaterhouseCoopers has reiterated the benefits that consumer savings can have for the economy as a whole.

John Whiting, tax partner at the firm, explains that the issue revolves around investment.

Should individuals choose to invest, he notes that their funds are placed in companies, helping to boost the availability of credit to that organisation.

However, other forms of saving also ultimately lead to greater levels of investment being made.

Mr Whiting points out that balances deposited into a savings account or placed under the control of a pension fund are all invested on the saver's behalf.

Again, this leads to greater amounts of money being put into businesses and eases the supply of credit across the economy.

However, he warns that the current economic situation has resulted in consumers being faced with opposing responsibilities.

On the one hand, reduced VAT rates are among the attempts being made to increase high-street spending and kickstart the retail economy.

But at the same time, consumers are being encouraged to save more in order to ensure banks can cover their lending.

This could leave many members of the public unsure of whether they should save, save, save or spend, spend, spend in order to help their country.