Consumers repaid unsecured debt in July for the first time in five months and households banked an additional 7.1 billion pounds ($9.8 billion) in deposits, well above the pre-pandemic average.
“Caution prevailed at the end of social restrictions (‘Freedom Day’) in mid-July, instead of a spending splurge being unleashed,” wrote Sandra Horsfield at Investec in a note Tuesday. Excess savings climbed to 148 billion pounds, she estimated.
The figures tally with a sharp drop in retail sales last month. It suggests consumer confidence was sapped by a resurgence of coronavirus cases and a “pingdemic” of workers forced to self-isolate after coming into contact with someone who tested positive for Covid-19.
Bank of England officials are relying on consumer spending to sustain the economic recovery from last year’s pandemic-induced slump, with the central bank anticipating households will run down around 10% of their additional savings.
Source: Economy - investing.com
