British consumers must rediscover their habit of saving to avoid putting undue strain on the economy, according to Ernst & Young Item Club.
The respected club of economists uses Treasury forecasting models to predict the health of the economy.
According to Peter Spencer, chief economic adviser to the Item Club, a great deal of incentives to save has been withdrawn, adding to the situation where "we are saving too little as a nation".
"Gordon Brown is also setting a bad example by borrowing a lot of money and we are simply following," he told BBC News.
Mr Spencer predicted the pension deficit would put the economy under strain in the long run, partially due to the "serious degrading" of the occupational pensions system.
The quarterly report predicted a budget deficit of £12 billion for 2005-2006. This overshoots the £6 billion margin of the Golden Rule identified by Chancellor Brown, which may result in necessary tax rises in the next budget.
The group's spring forecast said the economy was strong in the short-term, predicting growth of 2.7 per cent in the current year.
Economists warn: "Save the savings culture"
Financial Services > Savings > Savings and Investments News
Economists warn: "Save the savings culture"
Mon, 25 Apr 2005
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