Britons have saved £150bn during Covid-19 pandemic… now experts urge us to splash out when the economy reopens to breathe life back into the country
- Britain’s ‘involuntary’ savers squirreled away more than £150billion last year
- Families built up their bank deposits from £1.48trillion to £1.63trillion in 2020
- Bank economist Andy Haldane hopes war chest will help post-pandemic slump
Britain’s ‘involuntary’ savers squirreled away more than £150billion last year as the pandemic stopped them from splashing out on expensive holidays and nights out.
Families built up their bank deposits from £1.48trillion to £1.63trillion over the course of 2020 – a rise of £151.7billion, the highest since records began in 1997, according to Bank of England figures.
Bank economist Andy Haldane is counting on this war chest to help Britain claw its way out of the pandemic slump. He hopes consumers will be desperate to spend cash when the economy begins to reopen later this year, funnelling much-needed income to struggling theatres, restaurants and bars.
Britain’s ‘involuntary’ savers squirreled away more than £150billion last year as the pandemic stopped them from splashing out on expensive holidays and nights out
Many families who cut back on spending during the pandemic have used spare cash to pay off debts. They paid off a total of £16.6billion in 2020 – another record.
A hefty £14billion of this was credit card debt, taking the total Britons owe on plastic to levels not seen since 2014.
But not all households are benefiting from the lockdown savings boom as the statistics mask a huge disparity between well-off families who have been able to work from home and employees – typically on lower incomes – who have seen jobs axed.
Josie Dent, of the Centre for Economics and Business Research, said: ‘Saving and debt repayment are only possible for those who have not lost their source of income. There have been a large number of individuals who have been forced to access credit in order to fund their day-to-day expenses.’
Unemployment has risen from 3.9 per cent to 5 per cent since the beginning of the pandemic, meaning 1.7million people are now searching for work.
Meanwhile, 9.9million jobs have been covered by the furlough scheme since April at a cost of £46.6billion to the taxpayer.
Unemployment is expected to hit 7 per cent this year before beginning to fall back again, straining the wallets of thousands more households. The Bank’s report showed that consumer credit borrowing shrank at the fastest rate in more than a quarter of a century in December. The annual growth rate in the borrowing, which includes credit cards, personal loans and overdrafts, stood at minus 7.5 per cent – marking a record low since the data started in 1994.
Families continued to shore up savings. The net flow of deposits was £20.9billion in December – up from £18.4billion in November.