Spend or save? Lockdown has changed people's priorities

An increase in savings was the silver lining of lockdown for many people in the UK. With spending opportunities limited, households across the country put aside more money than usual over the past year.

Millions of us started working from home, cutting out the commute. Meanwhile, pubs, restaurants and "non essential" shops were closed, along with sporting events, theatres and many other leisure activities, and holidays were cancelled.

As a result, Britons who have seen their incomes remain about the same but their spending plummet during the three lockdowns are estimated to have amassed as much as £250bn in savings, equivalent to 20% of the amount households spend each year.

This comes at a time of record-low interest rates, when there has never been less of an incentive to save.

Now that the country is opening back up again, will there be a sudden release of pent-up consumer demand? Or will these "accidental savers" play safe and keep hold of their savings -- and perhaps even continue to spend less and save and invest more?

Half (51%) of people who have built up their savings during the pandemic intend to hang onto these funds, new research has found.

Three quarters (74%) of the more than 3,000 people surveyed by Ipsos MORI for Nationwide Building Society's UK Consumer Insight Panel said they want to save more than they have done in the past, as the pandemic has shown the world is full of risk and uncertainty.

Nine in ten (89%) agreed it is important to be careful and always have savings to cope with unexpected events, and eight in ten (79%) said they want to save enough money so they don't need to worry about losing their job.

The findings pose a challenge to the view that the UK economy will bounce back in 2021 due to a big increase in spending, Ipsos MORI said.

Looking at public values, the survey also revealed that hedonistic sentiment among the UK public has fallen to its lowest level for 22 years. Between 1999 and 2019, an increasingly large proportion of UK residents agreed with the idea that "The important thing is to enjoy life today, tomorrow will take care of itself".

Two years later this progression has been reversed, with less than half (46%) of the public agreeing. For the first time since 1999, more disagree than agree with this statement.

"At this stage in the recovery, the data suggests that 'The Great Unlock' could be less like the roaring twenties, and more like the 1950s -- with the nation adopting a type of post-war austerity," Ipsos MORI concluded.