Spending on overseas holidays is the top priority for consumers after lockdown, new research reveals.
A release of savings built up by households over the past 12 months is set to lead to an increase of more than £50 billion in consumer spending this year.
Nearly half (46%) of Britons have seen their cash savings increase over the past year and collectively they are estimated to be holding an extra £192 billion, according to the study by financial mutual Scottish Friendly and the Centre for Economics and Busines Research (Cebr).
Its research reveals households plan to spend more than a quarter (26%) – £50 billion in total – of their lockdown savings over the course of 2021.
More than a third (34%) of those who plan to spend more money this year say their cash will go towards travel and accommodation for overseas holidays.
Meanwhile, 29% of those with extra savings from the last year plan to spend more on domestic holidays in 2021.
Slightly fewer (28%) anticipate increasing their spending in restaurants and cafes.
But less than one in five (19%) said they had pent-up demand to increase spending in pubs and bars.
Many sections of the UK economy are set to benefit from a short-term boost in consumer spending, but not all households anticipate increasing their expenditure.
One in four (25%) plan to spend more money this year because of events of the past 12 months, but more than two in five (42%) say that they don’t have pent-up demand to increase spending this year.
Scottish Friendly and Cebr studied 50 years’ worth of households saving data and interviewed 4,000 UK adults as part of the study.
Kevin Brown, savings specialist at Scottish Friendly, said: “The extra cash that many Brits have been fortunate enough to save over the past 12 months has been sat idle in bank accounts while people wait for restrictions to be lifted.
“A large proportion of Brits clearly intend to enjoy the opportunity to finally spend some of that cash over the comings months on holidays, meals out and in the shops.
“This will provide a welcome boost for many businesses, but it could lead to a sharp spike in prices during the remainder of 2021, which risks hurting many savers.
“If interest rates are kept low, there is a real threat that inflation could rise rapidly above the Bank of England’s 2% target and be difficult to control. If this is allowed to happen, then it will be UK households who bear the brunt of its force. Anyone who has money with a bank or building society, could see the real value of their savings eroded in a relatively short space of time.”
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