British hoard more cash than other countries during pandemic
British consumers lead the world in piling up savings during the pandemic lockdowns that closed off opportunities to shop and travel, a survey conducted in 17 nations shows.
The findings by the pollster YouGov Plc shed light on one of the biggest questions economists are attempting to unravel. How quickly households spend their spare cash - estimated at 250 billion pounds (€291 billion) in the UK and €500 billion in the euro area - will determine the strength of the recovery from the pandemic recession.
About a third of people in the UK increased savings since March 2020, similar to the level in Denmark but much higher than in the US, Germany, Italy, Spain and Australia, YouGov said. Its results were made available to Bloomberg.
The biggest portion of people said they’d only spend part of the excess money. Less than 15% said they’d spend the majority of their cash, but that figure was almost 17% in the UK, YouGov said.
The findings revealed growing optimism, with households in most countries expecting to be better off 12 months from now than they are currently. Most complained of a painful hit to their finances since the pandemic, led by India.
“Danes and Swedes have fared best among all of countries in the survey,” said Emma McInnes, global sector head of financial services at YouGov. “Across the eight European countries surveyed, some fared better than others. Two in five people in Italy and Poland saw their household’s financial situation worsen, which is significantly higher than France, the UK and Germany.”
Concerns over job security
The survey of almost 19,000 people was conducted from May 14 to May 28. It included more than 1,000 people in each country, except in Hong Kong where the sample was about half that size. In the US and UK, more than 2,000 people were surveyed in each.
Across the countries in the poll, most people took on debt, tapped savings or cut into non-essential spending. Less than a fifth were able to save more, YouGov said. That adds to evidence that it’s the richest households that were able to put away money, while most people suffered.
“Many people globally have had to deal with concerns and changes relating to their finances such as job security worries and new spending and saving patterns,” McInnes said.
India and Mexico were hit hardest, with about half of people saying their household finances declined.
Sharp recovery predicted
For the UK, the survey feeds the prevailing view that the economy is headed for a sharp recovery from the worst recession in three centuries. The Bank of England expects the biggest boom in consumer spending since Margaret Thatcher was prime minister.
The willingness of people to splash out pushed inflation over the central bank’s 2% target for the first time in almost two years. Retail sales surged at a record pace in April when shops reopened. Spending shifted to restaurants and bars in May when hospitality venues were allowed to serve customers indoors.
YouGov’s survey indicated that consumers in most place anticipate better days ahead.
“Generally, across most of the surveyed countries and regions, a greater share of people expect their finances to improve than decline,” McInnes said. “There are notable exceptions such as Singapore, Hong Kong and France.”
©2021 Bloomberg L.P.