Yahoo Finance Millions of 'accidental savers' benefit from pandemic
The pandemic has led to a spike in savings, particularly among those between the ages of 35 and 44, as British workers have each set aside an average of £2,674 in cash.
There has been a growing divide between those who have squirrelled away more money and those who have had to take a pay cut, faced redundancy or been excluded from Government support.
Millions of workers who have continued to receive their full income during repeated lockdowns have been able to cut their costs on everything from commuting and holidays to sports memberships and eating out.
The Bank of England estimated from May to November alone, British households built up an extra £125bn in savings. This represents five times as much as in any other nine-month period in history.
More than two thirds of people have been able to put money away during the pandemic, thanks to this reduced spending, according to a study by Gatehouse Bank, a savings provider.
On average, savers plan to spend a third of their new nest egg when lockdown restrictions are fully lifted, which would give an estimated boost of £36bn to the economy.
Charles Haresnape, of Gatehouse Bank, said: “With the economy locked down repeatedly for months at a time, more than half the adult population is sitting on extra savings.”
Most of those savings have been put into basic savings accounts, while 28pc of people paid them into an Isa, according to research compiled by Wesleyan, a financial adviser. The research found those aged 35-44 have been able to save the most during lockdown, putting aside an average of £297 a month.
Holidays and home improvements have been the top spending priorities once restrictions are lifted. However more than a third of Brits said they would continue to spend less post-pandemic, Wesleyan found.
Nathan Wallis, of the group, said: “It’s clear the pandemic has prompted many people to re-think their approach to savings but they should also think about where they are putting their money. Of course it’s important to have some cash that you can access easily for day-to-day or emergency use, but in an environment where interest rates are well-below inflation, simply putting money into a savings account could risk the value of it shrinking over time.”
Thomas Perkins, 28, from North Yorkshire, said he had saved an extra £6,000 which allowed him to maximise the amount he paid into his AJ Bell Isa since the start of lockdown last March.
Mr Perkins, who is a regular saver, said this would help pay off his £60,000 Help to Buy loan within the next two years, before it becomes subject to interest payments. The 28-year-old has also been able to pay extra into his self-invested personal pension.
He said: “I’m very fortunate and the pandemic has allowed me to save a lot more than usual and I have had about £500 more disposable income each month.”
Kevin Brown of Scottish Friendly, an investment group, said: “Recessions in Britain have typically led to a sustained increase in retail saving but there has never been a spike as severe as there was in 2020.”
The pandemic has ushered in a new culture of higher saving, as households are expected to set aside 11pc of their income in 2021, according to analysis from Scottish Friendly and the Centre for Economics and Business Research, a consultancy. This would amount to £3,023 on average per person.
