The amount of cash UK households and companies hold in bank accounts piled up at its fastest rate since 2007 in the first quarter, in a hopeful sign for future spending and investment.

Deposits by individuals and businesses excluding transactions within and between banks rose at an annualised rate of 5.4 per cent in the first three months of this year, compared with a low of 2.2 per cent in the third quarter of 2008, Bank of England figures show. This acceleration in M4, or “broad money”, is an important signal for the economic outlook, as a rise in the amount of cash sitting in bank accounts is likely to encourage spending.