Britons Saved on Record Scale During Coronavirus Lockdown
- U.K. saving rate jumped to 29.1% in the second quarter
- Worries about unemployment may hold back consumer spending
Britons saved almost a third of their income during the lockdown as the coronavirus pandemic shuttered stores and sent the economy into its deepest slump for centuries.
The saving ratio soared to an unprecedented 29.1% in the second quarter, the Office for National Statistics said Wednesday. The figures confirmed Britain as the worst-performing major advanced economy during the quarter, with gross domestic product shrinking 19.8%, slightly less than previously estimated.
Government wage subsidies for furloughed workers meant that many British households experienced only a limited loss of income, but the opportunities to spend were vastly reduced. Non-essential shops were closed for much of the quarter, and the leisure and hospitality sectors only began to reopen in July.
While signs are that cash involuntarily built up during the lockdown helped drive a strong recovery in the third quarter, how quickly the economy continues to grow will depend on whether consumers maintain their spending or insist on holding precautionary savings in response to mounting risks to the outlook.