Mark Berrisford-Smith, Head of Economics, Commercial Banking, HSBC UK gives an update on the economic outlook
As the UK economy re-opens during the next few months, one of the big questions is: what will consumers do with the roughly £200 billion of additional savings that they have accumulated?
HSBC’s revised forecasts assume that around £20 billion of this will be spent on current consumption by the end of next year, helping to lift GDP growth to around 5% both this year and next.
But it is also possible that households will avail themselves of this unforeseen opportunity to reduce their burden of debt, which has remained stubbornly high since the financial crisis. There has already been a marked reduction in consumer finance indebtedness, especially credit card balances. And in the longer term, lower levels of household debt will make it easier for the Bank of England to lift interest rates off the floor.
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