The Nationwide UK (Ireland) Savings index shows those under the age of 50 feel Government policy is encouraging them to save, especially the reduction in the universal social charge (USC).

Younger people are also being encouraged to save by Central Bank rules on the sizes of deposits needed to secure a mortgage, according to Nationwide UK (Ireland) boss Brendan Synnott.

The main index rose to 122 points in January, from 104 points in December – its highest level since September – as the pressures of Christmas spending receded. The rise in savings sentiment was driven by a rise in those who felt better about their ability to save and those who believe that government policy is creating a more positive Savings Environment.

The proportion of people who feel now is a good time to save stood at 34pc in January.

The number of people who feel negative about the savings environment was 29.8pc.

In terms of consumers’ intentions for any Surplus Money, half said they would use extra cash to pay off debts including their mortgage, more than the previous month.

A further 13pc said they would spend the surplus money.

This rise in sentiment was particularly strong in the under-50 age group.