Summer saving hampers consumer spending

British people saved more over the summer compared to pre-pandemic levels, despite expectations that households would be in spend mode, suggesting the rise in COVID-19 infections held them back.

In total, households saved an additional £7.1bn in July, down from the £9.8bn seen in June and far below the pandemic-peak of £27.4bn saved in May 2020, according to the Bank of England (BoE).

But the July flow is nevertheless "relatively strong" and well above the monthly average of £4.7bn seen in the year leading up to February 2020.

Ruth Gregory, senior economist at Capital Economics said the Bank's data provided "a further sign that rising virus cases sapped households' willingness to spend in July."

"There is still plenty of scope for spending to rebound strongly further ahead," she added.

Samuel Tombs, chief economist at Pantheon Macroeconomics, seemed less optimistic, saying in a Tweet:

"The economy now has been fully open for 3 months and most people have been vaxxed recently. If not now, will this cash ever be spent?"

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