Yahoo Finance High street splurge unlikely anytime soon despite £60bn unspent
High streets in England have opened for business after three months in lockdown and in the end it was a sombre affair.
The government has urged consumers to begin shopping again, for the sake of the economy, after it said non-essential shops could throw open their doors for the first time since 23 March.
Yes, there were queues outside major retail names, from Primark in Birmingham to Nike in London, but as estimates of shopper numbers across the country show, demand was still well down on the same period last year and the queues reflected the need for physical distancing in stores rather than a surge in spending.
It is probable that numbers were hindered by health concerns – understandably – alongside practical issues such as the lack of toilet facilities. Surveys have also made clear that workers are worried about losing their jobs and the prospect of getting employment elsewhere, especially if they earn a living in one of the harder-hit industries.
The sudden and shocking economic impact of the pandemic will affect everyone, including those who still have jobs. Why would they spend their savings when unemployment is a distinct possibility?And should their worst fears come true, they will need every penny to pay monthly bills.
Hundreds of thousands of people have already been made redundant. Official jobs figures on Tuesday are expected to show the number claiming unemployment benefits jumped to 2.6 million or even 2.8 million in the three months to April. In March the number of claimants was 1.24 million.
Worse is likely to follow. Anecdotal evidence suggests many of the UK’s 8 million-plus furloughed workers will be given notice of redundancy over the coming weeks as the government winds down the generosity of its support schemes.
Without rescue packages directed at the hospitality industry, many of the cafes and restaurants that high streets have come to rely on to drive shopping visits will disappear. Some of the biggest restaurant chains have already cut jobs and, as quarterly rent bills approach, the axe is likely to fall on many more.
A silver lining could be provided by those who feel secure enough to shop. It is estimated that since late March almost £60bn will have gone unspent, leaving many households with the choice of going back to buying all the things on their usual shopping list or grabbing the chance to change their ways.
The last time millions of households experienced large financial windfalls was in the demutualisation frenzy of the 1990s. Building societies and mutual insurers sold themselves to City banks, generating billions of pounds for their former members. Among other things, it fuelled a mania for conservatories.
Research into payouts from the more recent £38bn payment protection insurance scandal showed that compensation averaging about £3,500 per claim was mostly spent on deposits for new diesel cars. Retailers will be hoping that the near-£60bn in unspent money is deployed on high streets soon, but the danger is that households that have developed an enhanced taste for online shopping since March will not be tempted back to high streets and shopping centres in sufficient numbers.
