Britons are set to have saved up to £1 trillion by 2012, new research has shown.

The figures from the Alliance & Leicester group reveal the UK's savings have nearly doubled since 2000 to reach a current total of more than £876bn.

It also said that borrowing has remained relatively stable, with only a £79bn increase on money spent on credit cards, overdrafts and loans since the Millennium.

Tax-free cash Isas are also growing in popularity, Alliance & Leicester said, with money held in this way accounting for more than 20% of the UK's savings.

It has predicted the popularity of these savings will continue to increase, and that Isas will account for up to 35% of the UK's savings by 2012.

Ewan Edwards, head of savings at Alliance & Leicester, said: "We expect many of the trends over the last few years to continue, with overall savings balances rising and further growth in tax-efficient savings such as Isas, instant access accounts and different types of 'disciplined' savings."

But the figures reveal that while there has been an increase in people saving for a rainy day, up to one in four people have set no money aside for savings at all, with three quarters of that number claiming they do not have enough spare income to do so.

The research also found that while 39% of people think saving is important for their financial future, a small number (2%) still believe it is unnecessary.

The study found instant access accounts, which allow the customer to withdraw money immediately, have also grown in popularity. More than half of Britain's cash is now held in this type of account.

Meanwhile the figures show that notice accounts, which accept a regular amount of savings over a certain period of time, are also dropping, accounting for just 8% of the savings market.

Alliance & Leicester predicted these products will "die out" within the next five years.

Copyright © PA Business 2007