Bank of England says 70% of consumers will hold-on to COVID Lockdown savings

The Bank of England (BoE) has said that 70% of consumers will hold on to any savings they managed to accrue during COVID-19 lockdown.

In a presentation yesterday (February 4) afternoon the BoE said that private savings accounts were up £125 billion in 2020, despite the economic uncertainty and growing risk of redundancies.

The BoE’s Monetary Policy Committee (MPC) held interest rates at a record low of 0.1% yesterday in a move that could support a return to spending when restriction ease.

But, while it said that the COVID-19 vaccination program could see “bounce back” for businesses this spring, uncertainty remains as to whether car buyers and high street shoppers will spend the nation back to economic health.

Respondents to a survey conducted by the BoE revealed that more than two-thirds of consumers were likely to hold-on to their cash as uncertainty persists.

Andrew Bailey, the governor of the Bank of England, described the UK’s vaccination program as "excellent", suggesting that it would speed up a return to normal life, adding: “We do think that that is going to support a sustained recovery throughout the rest of the year.”

The BoE suggested that many consumers, who expect "life to return to normal" within a year, may be disappointed by ongoing restrictions, however.

It added: "The COVID vaccination programme would be expected to lead to an easing of social distancing restrictions, reduced economic uncertainty and higher activity, although the timing of those effects is hard to predict."

AM reported today that Auto Trader had said that January’s 7.4% rise in used car values has given it “confidence we’ll see a quick return to health” as COVID-19 ‘Lockdown 3’ restrictions start to ease.

Earlier this week the online marketing platform published a set of KPIs gathered from its online car buyer data which could indicate another post-lockdown sales boom.

But concern remains that car showrooms could remain closed into the key March ‘plate change month, leading to a continuation so the near-40% new car registrations decline reported by the Society of Motor Manufacturers and Traders (SSMT) for January.

Yesterday, the Finance and Leasing Association (FLA) reported that its members feel there are ‘opportunities for growth’ this year – if the COVID-19 vaccination programme proves successful.

Respondents to the FLA’s Q1 2021 Industry Outlook Survey were divided on the outlook for economic conditions, with 52% expecting some improvement over the next twelve months, while 44% expected conditions to worsen.

But growth over the next twelve months could be achieved if the COVID-19 vaccine proves effective in tackling the current pandemic.

The FLA said, if the virus is brought under control, almost 70% of respondents expected some increase in new business, with 37% expecting new business to increase by 10% or more.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The results of the Q1 2021 survey reflect the industry’s concerns about the adverse impact of prolonged uncertainty on businesses and households.”