Brits pause holiday plans and major purchases
Research from financial planning firm Quilter, carried out by YouGov, found that three-fifths of Brits are delaying a large purchase or expenditure in 2022 due to the spread of the Omicron variant.
Of these who plan on delaying a large purchase or expenditure, 60% said they were delaying a foreign holiday, with those in Scotland, Wales and Northern Ireland more likely than those in England to delay booking a trip.
This compares to 30% of respondents who said they were delaying the purchase of a holiday within the UK, and 16% of respondents who said they were delaying the purchase of a new or used car.
The findings will come as a blow to retailers, airlines and holiday providers who would have been hoping that the start of 2022 would have ushered in a return to normal holiday patterns before a busy winter booking season.
However, delaying major purchases leaves Brits with unexpected savings that will go unspent until the situation becomes clearer.
According to data from the ONS, the average spend per visit by UK residents overseas was £670 per person in 2019. The cost of a holiday for a family of four therefore works out at £2,680. With inflation running at 5.1% in the 12 months to November 2021, this unexpected saving will likely be losing value in real terms.
Shaun Moore, tax and financial planning expert, said: “Nearly two years into the pandemic, and despite an improving situation with Omicron, people still feel deeply uncertain.
“January is normally the time when people’s minds wonder to sunnier climes, and the January sales tempt people into booking their summer holiday. But these are not normal times as the pandemic, rising energy bills and a national insurance hike will all hit people’s pockets prompting 60% of those surveyed to say they are delaying spending on large purchases and holidays. Foreign holidays are the biggest casualties as people choose to wait and see.
“This could well be driven by the very fluid environment when it comes to travel restrictions, the increased cost of testing before and after travel, as well as the chance of being hit with an unexpected cancellation cost. All these factors will be weighing on people’s minds and causing people to put off their plans to travel abroad, at least for the time being.”
People with unexpected savings, potentially running into the thousands of pounds, will need to consider the threat of inflation eroding the real value of the money if it is left in a current account or easy access savings account.
For those that think they will avoid travel or cancel their large purchase altogether, it might be worth using the savings to pay down debts, starting with those with the highest interest rate, or consider investing in stocks and shares.