Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

Cash back?

29 September 2015

Half of all UK workers save nothing, but half the cash in the UK is stashed away.  We think that doesn’t add up.

There’s about £62bn worth of bank notes issued in the UK, according to the Bank of England.  That’s about £1000 for every inhabitant of the home nations.  The Bank’s report estimates that about half of that is in circulation at any one time, and that’s a lot of cash.  So, hands up if you have that average of £500 in your back pocket.

While we can pay for everything from a newspaper to a hire car with a card, there seems to be plenty of questions that still need to be answered regarding cash.  Is the black economy the go-to culprit? That’s a fair assumption, but really, the truth is that neither the Bank nor anyone else, is quite sure what all that filthy lucre is being used for. All those toll booths, bus fares and burgers add up to a proper pay packet, but the best part of thirty billion is more than a fair day’s pay.

The best explanation, given by the Bank, is that there are hundreds of pounds hoarded in every household in Britain.  Given the enduring distrust of financial institutions, the Bank of Under the Mattress has regained popularity like never before.

Paradoxically though, another report claims that almost half of all workers in Britain save nothing at all - not even in the back of the sofa branch.  That’s the finding of True Potential, a Newcastle-based financial services and technology organisation, that claims the retirement nest egg for the average worker amounts to savings of just £1.72 a day.  That’s about a supermarket sandwich worth of retirement planning.  As the canny Geordies put it, the fact that many people choose to spend on coffee rather than their retirement funds points to a culture of complacency. 

More worryingly, True Potential says nearly half of all working adults, some 13.5m people, are not putting aside anything for retirement.  They rather unkindly call it refusal, but it may just as often be necessity, as many workers earn little enough to make it from day to day, let alone plan for retirement.  Of course with the dawning of the Government’s auto enrolment scheme, the situation may well change as all employers will be required to deduct pension contributions from their employees unless their employee opts out of the scheme.  Time will tell ….

All that cash has to be going somewhere.  According to the BBC, 19 out of 20 of us still uses the stuff regularly.  The other one of us still admits to using cash on occasions.  We’re also all still visiting the cash machine, on average withdrawing £67 every time. So clearly not all of those banknotes are being used for black market purposes.  Some of them must be stashed away in the pillow cases of the financially distrusting.  Then again, would you trust an ATM that can dispense £67?  Makes you think it might be better to keep it under the mattress!

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springfords blog

Some news, views and comments about everything and anything, relevant and irreverent.

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