Saving the Nation – Will ‘accidental savers’ drive demand in post lockdown Britain?
Trends Briefing: 25th March 2021 | 9am-10am | Register here
The economy is a coiled spring, according to Bank of England chief economist Andy Haldane, writing in the Daily Mail last month. February also saw the news that Covid has created 6m ‘accidental savers’ – people who, finding that the shops, pubs, airports and restaurants are closed, have had no choice but to keep their disposable income in the bank.
Good news, then, for Chancellor Rishi Sunak, whose budget this week relies on a healthy post-lockdown return to growth thanks to the kind of pent up financial energy Andy Haldane believes is out there. Consumers will spend as soon as they are able to, and with tax thresholds frozen, in time more money will flow towards the Treasury as inflation and wages rise.
Or so the logic goes. But the big question is: will consumer spending bounce back?
Saving is certainly up. Our own consumer barometer has been tracking monthly spending and savings habits since 2018 and net savings expectations reached an all-time high earlier this year – having been consistently positive throughout the pandemic. Pent-up demand is there too; strongest for the activities we’ve missed the most since Covid began; holidays, meals out and live events.
But savings are not guaranteed to translate into spending. Those that have saved the most over the last year are also more likely to say they are worried about the financial impacts of the pandemic and that their job is more insecure as a result. And not everyone is saving: under 35s are no more likely to be saving now than a year ago, and those with incomes under £21k per year are saving less during lockdown.
So what are the prospects for economic recovery? Join us on March 25th as we explore the consumer outlook.