Household savings have hit their highest level in 14 years, excluding the pandemic, in a blow to Labour’s hopes of stimulating growth in the economy. Savers hoarded £338bn across Britain in the first three months of the year, squirrelling away 18.7pc of their total resources.
The value of excess savings increased rapidly during the pandemic as restrictions were placed on economic activity and physical movement. Between the first quarter of 2020 and the last three months of 2021, excess savings reached £244bn, or 13.5pc of household total resources, as a result of diminished household consumption.
This figure has continued to grow in a blow to Labour, which has made expanding the economy its number one mission over the next five years. David Pye of consultancy Broadstone said: “Households are clearly not rushing to spend the excess savings generated through the pandemic when consumption was slashed due to the unprecedented restrictions. “Unlike the US, households in the UK appear to be an outlier as they focus on maintaining savings to protect themselves against shocks like the cost-of-living crisis and in bringing down their debt as the cost of borrowing has risen sharply.
“As we appear to be moving towards a more secure economic outlook, it will be interesting to see whether households are able to loosen the purse strings and increase consumption or whether caution rules.” 06:05 PM BST Carpetright rescue deal confirmed but over 1,000 jobs cut Carpetright has been.