Londoners feeling the savings pinch

Britons have squirrelled away nearly a third of their salary on average in cash savings but Londoners, squeezed by the costs of living in the capital, put less aside, the Halifax said.

While the number of repossessions is on the rise, personal insolvencies have leapt and a quarter of British people have no savings at all, those who do save have managed to amass a healthy nest egg of £7,210 on average.

Halifax said the savings habits of its 15 million customers showed that while those who earned more had generally put more aside for a rainy day, Londoners were feeling the pinch.

Londoners had put aside more than £16,000 on average, but they saved the smallest proportion of their salary, just 23 per cent compared to a national average of 31 per cent.

"A lot will be devoted to the cost of housing which will leave a lower proportion of people's salary free to save," said Halifax chief economist, Martin Ellis.

"It's not just housing costs that are higher. Transport and other living costs are more. Londoners have proportionately less to play with."

Sixteen of the 20 local authority districts in Britain with the lowest proportion of savings relative to earnings were London boroughs.

The average salaries of Londoners in more affluent boroughs such as Westminster and Kensington and Chelsea, meant that putting aside a smaller proportion of total earnings still amassed a substantial nest egg. Others were less fortunate.

In 12 London boroughs such as Hackney, Lewisham, Newham and Islington, people were not only saving a smaller proportion of their salary, they were also putting aside a much lower than average total.

In Hackney, the average resident who saved had managed to scrape together £3,847 compared to the national average of £7,210.

However, Mr Ellis said the overall picture of saving in Britain was good. "We know there are a quarter of people who haven't got any savings but for those who are able to put money aside, it is reassuring," he said.

Mr Ellis also said the figures only showed money put aside in cash savings accounts and would therefore not include other accumulated wealth such as equity ISAs (individual savings accounts), other funds, national savings certificates or the equity in people's homes. Financial advisers generally recommend people save around one quarter of their annual income.