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A new survey by Nerdwallet has found that four in five consumers plan to spend above pre-pandemic levels throughout 2021 revealing that the recent financial behaviour of consumers and their spending plans have eased now that lockdown restrictions have changed.
The research found that 85% expect to sustain or increase spending from current levels by the close of 2021, however, only 8% plan to ‘significantly’ increase their spending from current levels
While 75% in the survey were able to make savings during lockdown, one in three are holding back funds they’ve accumulated, 57% also plan to cut spending in one or more areas
Whilst only 47% have ‘reasonable confidence that they will have the funds to sustain their current lifestyle by close of 2021
The study also revealed that 85% of Britons expect to at least sustain, or increase, their overall spending at current levels by the end of the year.
The research for independent financial comparison site NerdWallet found that 42% are planning to increase their monthly spending. A further 43 % plan to continue spending at current levels, with UK consumer spending having already exceeded pre-pandemic levels following the initial lockdown easing in April’². According to the latest data from Barclaycard, consumer spending also rose by 11.1% in June.
Just 8% in the new survey plan to reduce spending from current levels. However, only 8% said that they plan to increase their spending significantly by the end of the year, indicating that average spending increases are likely to be modest.
The survey also found that while three in four were able to make savings during lockdown, 28% have chosen to hold onto these funds for a rainy day rather than spend them.
25% have also been holding onto funds accrued during lockdown for a later larger purchase, with 17% having also invested new savings into ISAs, stocks or shares. 1 in 10 have used lockdown savings for a deposit on a mortgage or to purchase a new car.
Despite the cautiously optimistic picture for consumer spending overall, 57% said that they plan to reprioritise their budgets by spending less in one or more areas later this year. Significantly, 19% plan to reduce spending on overseas travel and 16% plan to reduce spend on UK travel by close of the year. 19% also plan to spend less in restaurants, pubs and bars once all lockdown restrictions have lifted and some of the pent up demand dissipates. 18% also plan to spend less online.
Some of the planned reductions in spending may be driven by a growing sense of financial insecurity. Only 47% in the study said they have reasonable confidence that they will have enough money to sustain their current lifestyle by the end of the year and 54% do not feel ‘reasonably confident’ of having a regular income stream throughout the rest of the year.
Looking ahead at potential roadblocks for the UK economy, one in five said that they feel ‘reasonably confident’ that the government can prevent another lockdown this year. Just 40% are confident that another lockdown wouldn’t strain their finances.
Senior Personal Finance Expert Denise Ko Genovese at NerdWallet said “Our research suggests that while many people plan to loosen their purse strings after lockdown, they are likely to do so relatively cautiously. With a large proportion of our study’s respondents lacking confidence in their own financial security, it is perhaps unsurprising that several plan to keep savings locked away and only a few plan to spend ‘significantly’ more after lockdown. Given that the date to completely lift all restrictions has also been pushed back to 19 July, their caution is understandable.”