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Brits get ready for summer spending splurge

·2-min read
<p>Bank of England insists inflation is under control</p> (PA Wire)

Bank of England insists inflation is under control

(PA Wire)

BRITISH households are still paying down debt and building up savings despite the end of lockdown, offering fresh hope that business will benefit from a summer spending splurge.

The latest figures from the Bank of England show consumers paid back another £400 million of mostly credit card debt in April, the eighth-month running they have done so.

The amount of cash in bank accounts rose by another £10.7 billion, which was much less than in previous months, suggesting households have already begun to loosen their financial belts.

A 9.2% rise in April retail sales suggest people are itching to spend, as lockdown and spacing restrictions come to an end.

By some measures, there is £60 billion of pent-up money ready to be unleashed, though economists admit it is impossible to be sure how many of us will return to old spending patterns, and how many will remain cautious.

Thomas Pugh at Capital Economics said: “Overall, these figures suggest that our assumption that households will quickly go back to spending the same share of their income as they did before the crisis is probably in the right ball park. But there is an upside risk that consumers spend more of their savings than we have anticipated.”

Such a spending splurge is bound to lead to inflation, with a growing split among experts on how problematic that could be. The Bank of England governor Andrew Bailey says he is watching it closely, but believes it will be manageable.

Some inflation is due to a lack of supply of goods for manufacturing, something that should ease in time. The British Retail Consortium warns shop prices will rise in the autumn due to high food, shipping and commodity costs.

Meanwhile, the number of mortgage approvals for new house purchase rose from 83,402 in March to 86,921 in April. But actual mortgage lending only rose by £3.3 billion. Although this did come after record growth of £11.5 billion in March.

Yesterday, Nationwide reported that house prices have risen 10.9% in the past year.

A “race for space” has seen houses outside London and the South East enjoy particular jumps in value.

Cornwall is also a boom area.

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