UK shoppers to spend £40bn of lockdown savings - Bank of America study
There’s a heap of consumer cash waiting to be spent -- £40 billion to be precise. That’s the amount of lockdown savings Britons have and are only too willing to splurge in the post-Covid economic recovery, research has found.
It appears richer households have built up the largest piles of cash and are set to spend more than previously thought, as confidence “rockets”, the Bank of America said.
According to the Telegraph, the bank has issued major upgrades to its UK growth forecast as its live sentiment tracker shows consumer confidence has hit its highest level since late 2019 with unemployment fears easing.
Robert Wood, UK economist at Bank of America, said GDP could return to pre-virus levels by the end of the year as growth hits 7.4%, up from his previous forecast of 5.9%.
While the Bank of England currently assumes a 10th of savings will be spent, Bank of America’s survey points to an even bigger boost at a fifth – potentially a £40 billion rocket under the economy.
Wood said a “consumer splurge” plus more fiscal stimulus and a faster vaccine rollout would power a stronger recovery in 2021. Its survey suggests “consumers are planning to spend big in the next six months”, he said.
The Bank of England also recently upgraded its growth forecasts and expects households to run down their savings more than previously expected. Its own survey found that around a quarter of households planned to spend part of their cash piles while others will pay off debts or use the money for a house deposit.
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