The UK's savings pot grew to its highest level this century in the second quarter of 2006, figures from industry body IFA Promotion (IFAP) show.

IFAP's Savings Brake which measures the ratio of UK consumers' borrowings, not including mortgage debt, against their savings revealed that UK consumers saved more than 38.6 million pounds in the three months to end June.

That was the highest figure since the study began at the start of 2001. It compared to a low of 19.4 million pounds in the first three months of 2004, and eclipsed a previous high of 33.1 million pounds in the second quarter of last year.

But despite the healthy level of savings, people were still found to be taking on new debt at a ratio of 48 pence for every pound saved.

David Elms, chief executive of IFAP, said: This new fangled allegiance to saving is all well and good, but only if we show equal commitment to controlling our debts.

People are beginning to take heed of repeated calls to start saving, but seem to be eliminating spending and borrowing behaviour from their budgetary considerations.

The simple fact is that if we don't stop borrowing money, the positive effects of saving will be negated.

In the first quarter of 2006, UK consumers borrowed just 16 pence for every pound saved evidence of net debt repayment.

But Elms said that that had failed to result in a new financial pragmatism.

This is all very disappointing to see, he said. This quarter's results only go to show that the economy is in a state of flux and that a sensible budgeting mantra is yet to be embedded in the British psyche.

United kingdom Ifa