Forget the Roaring Twenties, it’s austerity Britain: Households reluctant to splurge £180bn Covid savings pile as consumer hedonism goes out of fashion
- More people shun ‘live for today’ mantra than endorse it for first time in 22 years
- Expectations of post-lockdown spending splurge could be wide of the mark
- Nationwide survey shows reset in how people see their finances
- Bank of England suggests people have stashed away an extra £180bn
A growing number of people are shunning the ‘live for today’ mantra and plan to keep hold of their lockdown savings even as restrictions ease, new findings suggest.
Expectations that the British economy will receive an injection of rampant consumerism after the pandemic could be ‘wide of the mark’ as people adopt a ‘type of post-war austerity’ last seen in the late nineties, Nationwide Building Society said today.
Figures from the Bank of England suggest that people have stashed away an extra £180billion worth of savings during the pandemic.
No splurge here: A growing number of people are shunning the ‘live for today’ mantra and plan to keep hold of their lockdown savings stashes
‘With hopes for a summer spending spree, lockdown restrictions, combined with the fear or reality of financial hardship, have instilled a more prudent mindset for many’, Nationwide said in its latest research.
More people are now shunning the ‘live for today’ mantra than endorsing it for the first time in 22 years, the findings claim.
The BoE recently upped its outlook for growth to 7.25 per cent this year, marking the best year of growth since 1941. But, this was largely on the back of a surge in pent-up consumer demand.
Ben Page, chief executive of Ipsos MORI, which was commissioned by the UK Consumer Insight Panel led by Nationwide to conduct the survey, said: ‘The public are not yet ready for a Roaring Twenties moment: prudence on saving and spending prevails and hedonist tendencies are at a 20-year low.’
More than half of people surveyed said they are spending or considering spending less as a result of Covid-19, while more than four in ten are saving more.
Three-quarters of people taking part in the survey said they wanted to put more money aside in order to protect themselves against risk and uncertainty.
Joe Garner, chief executive of Nationwide, said: ‘The pandemic has acted as a reset button to a long-term culture of consumer hedonism.
‘Lockdown has had a reversing effect on how we see our money – from a means to spend to a means of protecting ourselves against uncertainty and focussing on what’s important.
‘As we look ahead to a brighter future, we want to capitalise on this cautiousness by seeing more work being done to help consumers spend safely and for the benefit of society.
‘We must protect those who are struggling financially, as they have been disproportionately impacted by the pandemic and we cannot let them slip through the net.’
The latest findings also indicated certain generational differences when it comes to attitudes about spending and saving.
‘Pointing to a generational divide, young people are much more likely to “live for today”, with the research showing 61 per cent of Gen Z and 50 per cent of Millennials think this way, compared to 39 per cent and 42 per cent for Generation X and Baby Boomers respectively’, Nationwide said.
Spending less: More than half of people surveyed said they are spending or considering spending less as a result of Covid-19
Fifty-one per cent of people said they thought ‘financial wellbeing’ was about having a financial safety net, compared with 20 per cent who thought it had more to do with spending money.
Nationwide said: ‘By channelling public and personal spending in a way that benefits the nation in the long term, it is hoped that a “K-shaped economic recovery” – where affluent or struggling households further diverge due to the disproportionate impact of the pandemic – can be avoided at the same time as improving society.’
Research from Asda’s latest Income Tracker showed that average household disposable income increased by 13.1 per cent year-on-year in March, meaning households were on average £28 better off a week compared to the same period last year when lockdown began.