The £100 billion in excess savings built up by UK households during this year’s coronavirus (COVID-19) lockdowns could help fuel an economic recovery, according to the Bank of England.
Accidental savers working from home have not had any commuting costs and have been unable to spend on holidays, said the Bank.
The Institute for Fiscal Studies (IFS) has calculated that wealthier families saved, on average, more than £300 a month between March and September. However, the poorest households were £170 a month worse off.
According to Andy Haldane, Chief Economist at the Bank of England, the UK savings ratio, which measures the amount of disposal income that gets set aside, rose to 29% between April and June, compared with 6.8% in the same period last year. The ratio is more than twice as high as the previous record of 14.4%, set almost three decades ago.
Mr Haldane said: ‘As people’s incomes held up and spending was restrained, they have amassed around £100 billion of excess savings.
‘You are not going to go to the pub twice as much when they’re open again, but there will be some catch-up in social spending. There is plenty of scope there for the vaccine to release more of that pent-up demand.’