§ Mr. Ridleyasked the Chancellor of the Exchequer what are his estimates of the degree to which the savings ratio varies with the level of personal or household income; and if he will publish estimates of comparable savings ratios at different income levels for a typical year in the 1940s, 1950s, 1960s, and currently.
§ Mr. Denzil DaviesI regret that there are no reliable estimates of savings ratios at different levels of income—personal or household—at a given point in time. Cross-sectional evidence from the Family Expenditure Survey (FES) shows a positive correlation between income level and the savings ratio, but it is difficult to reconcile FES income and expenditure data with the national accounts and it omits consideration of the least and most wealthy members of society. Moreover, much of the correlation is probably accounted for by transitory changes in income which are not associated with immediate changes in consumption. Over time, there has been a tendency for the 239W savings ratio to rise since the Second World War, but over the last 100 years, despite a large increase in per capita real incomes, there has been no great change in the savings ratio. Overall, therefore, it seems that there is not a close or systematic connection in the longer term between savings behaviour and the level of personal income.
The table below gives the level of real personal disposable incomes, measured at 1970 prices, and the savings ratios in each of the years 1949, 1959, 1969 and 1976 (Source: Economic Trends, Annual Supplement 1977, published by the CSO).
Real Personal Disposable Income (£ billion 1970 prices) Saving ratio percentage 1949 19.3 0.5 1959 25.4 4.8 1969 33.6 8.1 1976 41.5 14.6