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Government saving advice affects high street spending

By FashionUnited


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High street spending could slump as turmoil in the market for British Government securities scare shoppers into 'panic saving'. Sinking returns for investors in Government bonds - gilts - mean millions will need to build up a bigger retirement nest-egg. As gilts, the backbone of the private pensions system, pay out less, more will have to be bought to provide pensioners with the same standard of living in retirement. This, in turn, means household budgets will have to be cut, threatening retail spending.

David Kearn, economic adviser to the British Chambers of Commerce, said, "When the penny drops and people realise they should save more, there will be a potential crisis. It will affect consumer spending and business investment. Companies have a statutory obligation to keep their pension funds topped up and will have to put aside more money"