Britons are poised to blow £50billion in pent-up savings when lockdown is lifted, new research claims.
A survey revealed that foreign holidays will be the most popular post-pandemic purchase, as well as staycations and eating out.
The study, by Scottish Friendly and the Centre for Economics and Business Research (CEBR), also found that 46 per cent of households increased their cash pot over the past year, swelling the UK’s total savings by £192billion.
But more than a quarter of this – around £50billion – is expected to be splurged in the coming months as lockdown-weary Britons treat themselves when restrictions ease.
It is a much more bullish figure than the 5 per cent forecast by the Bank of England.
A survey revealed that foreign holidays will be the most popular post-pandemic purchase, as well as splashing out on staycations and eating out
A survey revealed that foreign holidays will be the most popular post-pandemic purchase Pictured: Lisbon in Portugal
In a poll of 4,000 adults, more than a third (34 per cent) of those who plan to spend more money this year say they will splash out on a trip abroad.
Under Boris Johnson’s roadmap, foreign travel will be allowed from May 17, and will likely be facilitated by some form of certification, such as proof of a negative test or inoculation by vaccine.
Twenty-nine per cent of Britons will use extra savings for domestic holidays, while 28 per cent will fritter savings away in restaurants and cafes.
Twenty-three per cent will spend more money on electronics – a sector to have performed well during the pandemic – and 10 per cent said they will splash out on education.
The study, by Scottish Friendly and the Centre for Economics and Business Research (CEBR) also asked people about their future spending habits
Hospitality settings can open for indoor service on May 17, although there are calls for that date to be moved forward
Kevin Brown, savings specialist at Scottish Friendly, said: ‘The extra cash that many Brits have been fortunate enough to save over the past 12 months has been sat idle in bank accounts while people wait for restrictions to be lifted.
‘A large proportion of Brits clearly intend to enjoy the opportunity to finally spend some of that cash over the comings months on holidays, meals out and in the shops.
‘This will provide a welcome boost for many businesses, but it could lead to a sharp spike in prices during the remainder of 2021, which risks hurting many savers.’
Some economists have warned that the pent-up demand could lead to high inflation, but BoE Governor Andrew Bailey said the central bank does not expect inflation to hit suggested heights of between 4 and 5 per cent.
Instead, he believes it will return to around 2 per cent in the next few months.
He told BBC Radio 4’s Today programme this week: ‘We now have a more balanced picture of risks… The risks on the upside are that there has been a very large build-up in savings in the economy, largely because people have not been able to do the things they normally do.
‘The question of course then is: to what use will those savings be put and over what period of time? It could introduce more consumption and more demand into the economy.’