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Republic battens down hatches

Consumers in the Republic are saving more because they are worried about economic conditions, a savings index from a building society shows.

The Nationwide UK (Ireland) Savings Index increased by four points in July.

It was the first time that the index has increased since it was launched in March of this year.

Brendan Synnott, managing director of the building society said people were reluctant to spend and instead were putting what money they could aside.

"This month we have seen the first increase in the savings index since we launched in March. One of the main drivers of the increase is that more people think it is a good time to save.

"This may relate to the further evidence of uncertainty about economic conditions and reflect the view that people are again becoming reluctant to spend because of this uncertainty. However, this is a one-month result and the August data will provide a clearer picture."

Although the majority of respondents think regular saving is important, only 40% responded that they save on a regular basis.

Less than 10% of people now think that government policy encourages saving, while half of those who responded felt that current policy discourages them from saving, an increase from 47% in June.

Although the proportion feeling discouraged remains high, it is down from the 55% high recorded in March.

When asked their preference as to how they might allocate any money over and above their everyday needs, 30% of respondents would save their spare cash.

The majority would use the surplus to pay off debts, including their mortgage, while a further 11% would spend the extra money. Meanwhile, the savings ratio is 10%, according to Davy economist Rossa White.