Rishi Sunak has urged people who have worked from home during the crisis and built up savings to spend heavily next year.
Home workers urged to spend savings after pandemic ends: Speaking during an online event for party members last weekend he said he “felt good” regarding the UK recovering when the pandemic eases. He said “I feel good about the bounceback – I think people have been sitting at home, building up savings hopefully and we would like to go and spend them when we get back.”
He also appealed to the Conservative party “old school” to bear with ministers during the crisis as they impose more restrictions to help ease the country through troubled times. He said “It is very difficult for us. We are Conservatives, we believe in freedom. This is very difficult but this is unfortunately necessary at the moment – we have just got to get through these next few difficult months.” Earlier this month a report from the Centre for Business and Economic Research stated that, on average, households have managed to save an estimated 19% of disposable incomes during 2020, which equates to £7,100 per household or £197 billion across the country.
The CEBR said “The £197 billion question, therefore, is what will households do with this money that they have accumulated in 2020 when restrictions ease? Of course, a large chunk of these savings will have gone into pensions, which will not be available for spending for some time.” It also warned us that “spending behaviours will depend on how confident consumers feel about the economy next year.
A combination of Brexit and the end of the furlough scheme … could damage economic output and the labour market early next year, meaning consumers would rather hold on to much of the extra cash they have accumulated in 2020, rather than spend it.”
During an interview with The Telegraph CEBR’s deputy chairman, Douglas McWilliams, said “The money is there.
What’s critical is whether consumers have enough confidence to spend it.” As Mr Sunak announced last week the Budget will be held early in March at which point he will outline the Government response to the economic crisis, with a leading independent economist. Julian Jessop, saying “This is a welcome change of tone from the Chancellor. Just a few weeks ago he was warning that our ‘economic emergency has only just begun’, which sent exactly the wrong message to consumers and businesses.
But if he wants people to spend their increased savings – and companies to invest more – he also needs to stop worrying them with talk of tax hikes.”
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