The savings index fell slightly in April as the number of people who believe it is a good time to save their cash fell and negativity towards Government policy increased.

The Nationwide UK (Ireland)/ESRI Savings Index, which look at overall sentiment towards saving, fell slightly last month, from 102 to 101.

Some 60 per cent of people said Government policy was discouraging saving, with only 26 per cent believing that it is a good time to save, from 31 per cent a month earlier.

Over a third of people said they were saving for unexpected expenses, down from 46 per cent a year ago, while almost 20 per cent are saving for education and training as the employment situation remains challenging.

A rising number of people are also planning to splash their savings on holidays and buying or renovating their home.

"The decline in the Index this month is driven by negativity towards the economic environment and government policy towards saving, in particular amongst those aged over 50," said managing director of Nationwide UK (Ireland) Brendan Synnott. "We expect the overall index to decline further as the economy improves and while there has been no significant increase in preference to spend reported in the findings during the past year, there has been a noticeable change in the reasons why people are saving. This change is from a general precautionary motive to specific intended purchases like holidays and home renovations and would suggest that consumers are moving closer to a situation whereby their level of spending will increase."

However, he noted that the upcoming water charges and other issues in the economy may impact on intended spending in the months ahead.