More people are saving regularly despite low deposit rates and higher taxes on saving, a new survey shows.

According to the Nationwide UK (Ireland)/ ESRI Savings Index for July, the proportion of people saving regularly increased to 41 per cent from 35 per cent the previous month. This increase is occurring amongst both the over 50s and under 50s age-groups.

Since January, the level of regular saving has gradually improved and this month’s data represents a return to the normal long-term level of saving amongst consumers and a reversal of a decline which started in autumn 2012.

Overall, the index, which measures overall sentiment towards saving, increased to 102 in July, a seven point increase versus the previous month.

Brendan Synnott managing director of Nationwide UK (Ireland) said the increase in the index month reflects the improvement in the overall economy.

“It appears that people have absorbed the impact of the property tax introduced in 2012 and are now rebuilding their personal finances,” he said, adding that a further positive dynamic is the change in preferred use for spare funds.

“Preference to pay down debt is declining while more people say they would spend, which may well translate to an increase in retail sales.”

According to the survey, 40 per cent of people said they would use surplus cash to pay off debts, a 6 per cent decrease from last month.

The proportion of people who say that government policy discourages saving continues to rise, increasing to 66 per cent in July, up from 65 per cent last month and 57 per cent a year ago.