Jeff Prestridge  

Are we on the cusp of an almighty recovery?

Jeff Prestridge

Jeff Prestridge

Forget the ‘beast from the east’ — and what an unpleasant weather beast it has been. Spring is definitely in the air; the signs are everywhere.

For example, the swans round my neck of the woods (Berkshire) are getting all territorial ahead of mating, while the dawn chorus is becoming more thrilling by the day.

Healthy robins are friendlier and more cheeky than they were a month ago while snowdrops abound. Darling buds of May? No. The darling buds of February are here, and spring is upon us.

I also passionately hope and pray that this oncoming, onrushing spring heralds a reboot for the country as we begin to emerge (in song) from lockdown — and life returns to a degree of normality.

As a result, more work done from the office rather than from the spare room. Train travel encouraged rather than discouraged. Vaccinations the norm rather than primarily for the elderly.

Let us hope that the Bank of England’s cheery chief economist, Andy Haldane, is right when he talks about the economy being “poised like a coiled spring” after the awful battering it took last year — a battering that saw the economy shrink nearly 10 per cent. All rather frightening and destructive.

Of course, there is plenty more pain around the corner as good businesses shut, unemployment ratchets up, and government support for the financial victims of lockdown is either withdrawn or reduced.

For many people, 2021 will be a horrible year as they struggle to deal with over-indebtedness, insufficient savings and low, erratic or non-existent earnings. According to the Financial Conduct Authority, one in four adults are suffering from low financial resilience. That percentage is likely to rise over the coming months.

Lockdown savings

Yet Haldane’s optimism is not unfounded. He talks about £125bn of money having been put aside by households since lockdown was forced upon us last March — primarily households where jobs have been maintained, but outgoings have been trimmed as a result of not having to travel to work.

They are the haves as opposed to the have-nots (those with low financial resilience). Yes, we are living in an ever more divided Great Britain.

Come the end of June, Haldane says this figure could well have doubled to £250bn. Money that will then be dripped back into the economy as lockdown is relaxed, he says, and cinemas, shops and restaurants reopen (with or without access to alcohol) and we go spend and social crazy.

There will be new cars to be bought, new giant size televisions to be acquired, and new homes to be moved into — with or without stamp duty costs to pay. Even overseas holidays to enjoy at some stage.

Haldane says the Bank of England predicts that 5 per cent of this lockdown savings could be spent in the coming months, although he believes the percentage could be much higher as some households celebrate liberation from lockdown in spectacular style.