´óÏó´«Ã½

Good old-fashioned thrift is holding back the economy, we're told.

Today's show how much we're on a savings binge.

It's reporting another one million customer savings accounts over the past year. More significant is the £49bn of arranged overdrafts with business clients which is not being used.

With foreign banks busier in the British market-place than had been expected, RBS is using those factors to explain its failure to hit the business lending targets set by government.

Facing claims that it's constraining lending too much, it says it's approving 85% of loan applications - "consistent with previous years".

Its claiming that nearly £80bn in gross new lending to households and businesses means it's put more than twice as much credit into the market than Barclays.

An independent referee between banks' claims they're lending, and customers' claims they're not, is Bruce Cartwright, accounting partner at PricewaterhouseCoopers.

He says he's hearing lots of complaints about the pricing of credit, but not about its availability.

The key for businesses, he says, is to be clear what they need the money for: "Sometimes, companies are not clear themselves. There's a difference between seeking money to prop up losses you've incurred, and saying 'I'm coming out of recession with increased demand, so I want to stock up'. Credit processes will be more robust, so you have to have your facts together".

He adds that banks want thriving customers. If they are too keen to put them out of business, then the bank won't be around for long.

And facing nearly £14bn in impaired loans last year - the measure of RBS's exposure to problems in the wider economy - it will have to hope it's right when it says that has now peaked.

Squirrelled away

The shift from excessive borrowing by households and businesses to a startling rise in savings is a key factor shaping the state of the economy.

That was underlined by the most recent forecast for the Scottish economy from the Fraser of Allander Institute at Strathclyde University.

It shows that the household savings rate is up to more than 8%. At the start of 2008, before the downturn, that figure was negative. That saving is not just money being squirrelled away. It's debt being reduced.

In particular, there's been some evidence of mortgage holders using the opportunity afforded by low interest rates to lower their principal loan.

In the business sector, you get some idea of the savings from the disappearance of £200bn of newly-created money onto balance sheets.

According to Professor Brian Ashcroft, of the Fraser of Allander Institute, the surge in new money might have been expected to boost the money supply.

But because the quantitatively eased money is being used to strengthen balance sheets, that measure looks flat.

You can see its impact on RBS. The bank has shed nearly £700bn in assets in one year, leaving it with more than £1.5 trillion on the balance sheet.

So while that helps explain the increase in its capital base, known as core tier 1, that newly created money will have helped raise the capital base ratio - sharply up from 6% to 11% in a year.

Does that mean quantitative easing has failed? No, says Ashcroft - without it, we'd be deep in economic depression.

Bank job fears

The Fraser of Allander forecast for jobs suggests Scotland is probably close to a peak for unemployment. The most recent figures for those seeking work between October and December were at 206,000.

The forecast, though hedged about with uncertainty, is for a peak of 216,000.

Break that down, and the economists say the finance sector is due to lose more than 16,000 jobs this year alone. Yet it's reckoned only around 4,000 have been announced so far.

Does that suggest some big job losses announcement to come? Don't worry, just yet.

The economists are extrapolating from big picture figures, rather than offering inside knowledge of banks' plans.

RBS says it's already done its "heavy lifting" on shedding jobs.

There's less clarity on Lloyds Banking Group's plans.

But until it's sorted out the continuing multiple merger of Halifax, Bank of Scotland, Lloyds and TSB - with the Lloyds TSB Scotland element now on the market - and until its aligned its IT systems, the bigger job loss announcements may be postponed.