People stop saving either because they are so confident about the future they feel they don’t have to, or because they’ve run out of spare cash to put in the piggy bank. The slump in savings in the first three months of this year feels like a case of the latter. Rising mortgage bills and taxes crimped disposable incomes, but British shoppers were not yet prepared to make any major sacrifice in consumption, borrowing more to prolong the spree.

The proportion of income put away for a rainy day was the lowest in 47 years. Compared with the previous quarter, when four pence in the pound was set aside, just tuppence was saved. After adjusting for the increased value of shares in pension funds, people have actually been running down their savings – for the first time since the Lawson boom of 1988.

Thrift will return. Indeed, the latest figures on borrowing suggest households are already starting to retrench and cut their spending. That should slow the economic motor and reduce the need for much more policy tightening. But not in time for the interest rate decision next week. Another quarter-point rise to 5.75 per cent looks more likely than not.

The Financial Services Authority is right to crack down on the selling of payment protection insurance. Consumers are routinely misled into buying PPI. Some don’t even know they have purchased it. Many are not eligible to claim. PPI can be a useful product but has become an institutionalised racket. The fact is that for every £1 paid in premiums, only 20p is paid in claims. Lousy odds. Poor show.

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