UK Households Drain Savings at Record Rate as Cost of Living Crisis Bites

Households in the UK withdrew a record amount from their savings in May, due to the cost of living crisis and rising borrowing costs.

The net outflow from savings was £3.8bn, the largest on record, with inflows into National Savings & Investments accounts being the only factor that prevented the figure from being higher.

The Bank of England's policy action of a 0.5 percentage point interest rate hike to 5% is aimed at quelling demand in the economy to bring down inflation, which remained at 8.7% in May.

The bank is trying to stifle consumer spending and demand for credit, to slow the pace of wage and price growth and prevent inflation becoming engrained.