Released on = April 16, 2007, 4:43 am

Press Release Author = Bharat Book Bureau

Industry = Marketing

Press Release Summary = Executive Summary

Savings and investments form the essential counterpart to the financial services
industry\'s lending activity.


Press Release Body = Savings & Investments Market Assessment

Executive Summary

Savings and investments form the essential counterpart to the financial services
industry\'s lending activity. The dynamics of the sector are volatile: savings fall
as debts rise and vice versa. There are many conflicting pressures and wide swings
in the value of savings, depending on the rate of interest and the state of the
financial markets. Politically, savings are very important as an indicator of
individual and household wealth.

In this Market Assessment report, the savings gap in the context of media concerns
that the State will provide inadequate pensions for up to half the population, and
that there is limited provision through company schemes has been examined. Also
considered is the current state of the economy and the changes in the savings ratio,
interest rates and household wealth. Demographic pressures will place a greater
burden on the shrinking working population if the elderly or early retired have to
be supported from investment returns.

The wealthy invest large and increasing sums in bank deposit accounts and building
society savings accounts. Banks compete for those deposits by cutting the cost of
access to funds and making it easier to withdraw them. The increase in wealth caused
by extra investment by depositors outweighs the growth in consumer debt so, in the
aggregate, banks continue to increase the capital under management.

Also considered is the development of state-sector savings and investments designed
to encourage saving, which have generally been less successful than hoped.

Unit trusts and investment trusts suffered from the stock market falls between 2000
and 2003. Although they are recovering in terms of performance, they have yet to
regain their former popularity with households who had considered them much safer
investments than they really turned out to be. Pension funds and insurance company
funds are more cautiously managed than before the crash, but the expectations and
regulatory demands have increased significantly.

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