I wasn't surprised by this report on the BBC website:
Consumers are likely to play safe as the UK emerges from lockdown rather than spend like the "roaring 1920s", a survey suggests.
It added:
While millions have seen their finances hit by the pandemic, others have become accidental savers. Research for a new Consumer Insights Panel suggests Covid uncertainty will mean the majority will remain prudent.
And:
[T]he survey of more than 3,000 people found 74% of those asked wanted to save more than they had pre-pandemic. The risk and uncertainty highlighted by Covid meant many were keen to build a financial cushion.
I know it is common to almost all economists that people will spend, spend, spend very soon and so inflation will skyrocket, but that is not what happened after 2008 when the economy suffered a smaller shock. The sectoral balances prove this (data from Budget 2021):
Households increased their saving after 2008 and they stuck to that until 2016.
What this survey finds is that households that can intend to do the same this time, and with good reason. People are worried about jobs and debts. Of course they will save.
Note that businesses also saved after 2008. Again, I think that likely right now.
A boom? Really? You have to be wildly optimistic to think it likely.
Hat tip: Tim Rideout
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You’d have to think that a lot of this is wishful thinking by economists to justify their own theories and beliefs. Not to mention politicians and those in the City, desperate to see some kind of recovery.
🙂
One little considered “spending” component post Brexit and Covid is working capital. All the companies that I work with (28) report higher working capital ratios. This is not productive expenditure, but merely there to manage risk.
And so less productive investment …..
I think that the other thing they do is to plant the idea in society that it is happening in order to try to make it happen – if you see what I mean.
I think that people are getting wise to it.
I said a while back on here that there will be a boom upon opening up but it will be a lot more complicated than that.
You might see a net boom, but that will obscure loads of businesses failing as markets reopen and support is withdrawn. Many will be holding out for the return of business, which, in some instances due to changes in behaviour from lockdown might never return.
Office developments and business districts and their supporting businesses will be in hot water.
The ‘big’ chain high street will continue to decline; but local businesses selling products and experiences that the internet cannot, could thrive if given the opportunity to start up.
There’s not a market for department stores any more, but there is most definitely a market for street food halls and local produce markets. This could be a good thing; I’ve never been a fan of homogenous highstreets full of chains – local businesses and eateries are what give character.
I can see a big asset grab by lenders as the un-lockdown takes hold and any form forbearance quickly melts away.
Maybe that is a boom in the Neo-liberal sense that they are talking about?