Consumer confidence and financial wellbeing in April 2021
Consumer confidence increased this month, with confidence now stronger than before the pandemic in February 2020.
40% of consumers have been able to save more money than usual over the course of the pandemic, with some intending to use these savings for trips away and home improvements.
Concerns about infection risk persist, especially for holidays abroad and large events.
Consumer confidence looks strong as lockdown measures ease
Consumer confidence grew in April, continuing an upward trend throughout 2021. People’s confidence in the future of their own household finances is at +10 points, which is an increase of 14 points compared to last month. This is the first time since the pandemic began that the score is above zero, meaning that more people are optimistic about their future finances than are pessimistic.
Confidence in the future of the economy increased by 11 points this month, and is now at -2, which is the highest it has been since September 2016, shortly after the Brexit vote.
The jump in confidence no doubt reflects the success of the vaccination programme, the relatively low level of infections and the easing of restrictions. Interest now is whether this confidence will lead to a consumer spending splurge that will help the UK economy to recover quickly.
Will consumers spend their savings?
Consumers have the money to spend. The Bank of England estimated that households saved an extra £125 billion just between March and November last year and this stock of savings will have continued to rise considerably.
These ‘forced’ savings are not spread evenly across consumers though. In April, two-fifths (40%) of consumers told us they had been able to save more over the course of the pandemic, but this was most common among those on higher incomes. This might have implications for how much of the savings are spent in the coming months as wealthier households tend to be more likely to hold on to extra savings.
To explore this, we asked those consumers who have saved more how much of their additional savings they intend to spend over the rest of this year. The results indicate that, while we can expect spending, a large proportion of the savings is likely to be held back.
Of those who said they had plans, more than half (52%) intend to keep more as savings than they spend. Only 29% said they intend to spend more of it and 19% said they intended to allocate the same amount to saving and spending. Those on lower incomes (a household income less than £28,000) are more likely to say they would spend more than keep as savings (35%).
However, many people have no clear intention. Two-fifths said they don’t know yet, and those on lower incomes are much more likely to say this. 47% of those with a household income of £28,000 or less said they didn’t know how much they would spend versus save, compared to 20% of those with a household income over £55,000.
People want to spend on holidays, but are worried about the safety of travelling abroad
For those intending to spend their savings, holidays and breaks away are the most popular choice, with 61% expecting to spend some of their money in this area. Nearly half (47%) intend to spend on household improvements, and around three in ten on hospitality and events and days out.
This suggests a desire among UK consumers to get away after lockdown, but the options available will be heavily influenced by infection rates domestically and abroad.
Continued safety concerns would hold back consumers. We’ve found that levels of worry about infection risk varied significantly for different types of activity, but strength of concern broadly aligns with the order in which restrictions are being eased.
The majority of consumers still feel worried about the prospect of going on holidays abroad and attending large events when allowed (60% and 58% respectively). People are less likely to be concerned about sitting outdoors at a pub or restaurant (28%), visiting non-essential shops (30%) and using services such as hairdressers and beauty therapists (30%). It may be that as further restrictions are eased people will feel safer across more activities.
The fieldwork was conducted by Yonder on behalf of Which between 12th and 14th February 2021. A nationally representative sample of 2,079 consumers was surveyed.
If you have any questions or would like to find out more, please email Sophie Beesley at email@example.com