In the News
Recession Watch - UK Households Saving More and Borrowing Less
The latest data shows that there was an increase in saving and reduction in borrowing in September, and the macroeconomic implications of this should be self-evident.
However, from a theoretical point of view is confirms what the 1970s suggested - prior to that point many argued that higher inflation would see people look to preserve their wealth by buying goods and services, not least because if consumption if funded by borrowing, will mean that the real value of any debt incurred will decline under such circumstances.
Since then though, people's behaviour has suggested that when faced with high inflation, people look to preserve the real value of their savings by saving more rather than less.