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The saving pile

Some households have built up a large body  of savings over 2021 (previously estimated at >£125bn. Willingness to spend this seems to be growing, but it is not clear how fast this will happen or how much will actually be unlocked.

The Bank estimates that around 10% will be spent over the next 3 years, versus an estimated 5% in February.

Key uncertainties, demand side:

• Future path of Covid and the consumer response to it
• Speed of running down accumulated savings – will “spenders” be offset by new “savers”?

Uncertainties, supply side:

• Risk of return to previous low productivity growth
• Impact of new capital allowances on investment
• Frictions around reallocation of labour from low growth to higher growth sectors
• Impact of EU Exit

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