BRITS saved £16.2billion in April according to the Bank of England – more than triple the usual monthly amount despite millions of workers being on furlough.
The latest money and credit data from the Bank of England also showed that households paid off a record £7.4billion of debt in April.
The bulk of that, or £5 billion, went towards paying down credit card debt. The trend for saving and paying off debts comes as new figures show that 300,000 more UK workers have been furloughed in the past week, raising the total to 8.7 million since the start of the coronavirus crisis.
That means more than a quarter of the workforce is now being supported by the £14billion-a-month scheme. Most households are saving more because they are spending less, experts say.
Julian Jessop, economics fellow at the Institute of Economic Affairs, said of the Bank of England data: “Even many of those who have seen their incomes fall – including those furloughed on 80 per cent of their normal wages – may have been adding to savings.”
His colleague Philip Booth added: “Many people are ‘forced savers’ at the moment. Not only are people prevented from working, those who are still earning have not been spending anything like the amount they would in normal times. Meanwhile, the government is borrowing huge amounts of money to pay people on furlough who may then have little to spend it on.”
Research commissioned from Opinium by investment platform AJ Bell showed that the vast majority of furloughed workers surveyed – 93 per cent – said that they have saved money.
Forty-three per cent said that was because they were spending less on everyday life. Just over a third said the savings came from not having to commute. More than a quarter have even started a “side hustle” to make money.
Laura Suter, analyst at investment platform AJ Bell, said: “Lots of people are using lockdown to reduce their spending, shore up their savings and cut their debt, in order to get their finances in better shape for the predicted recession to come.
Cara Pacitti of the Resolution Foundation think tank, commented: “The Government lockdown has led to a huge income shock for millions of have stopped working.
But for many people the spending shock has been even bigger as there is nothing to spend money on. The only thing left to do is save or pay down debts.
She added: “This situation won’t last though. Furloughing has played a vital role in protecting people’s incomes, but as it is phased out many will find that our permanent safety net, Universal Credit, is far less generous.”
Did you miss our previous article…
https://www.hellofaread.com/money/rishi-sunak-plan-to-fix-unemployment-and-boost-the-economy-could-include-national-insurance-holidays-for-employers/
