Is it the end of hedonism as Brits hoard lockdown savings?
Research from the UK Consumer Insight Panel shows lockdown has flipped the nation’s priorities, with people adopting a type of post-war austerity last seen in the late 1990s.
The Bank of England estimates households have amassed an additional £180bn in savings since the first lockdown. However, with hopes for a summer spending spree, lockdown restrictions, combined with the fear or reality of financial hardship, have instilled a more prudent mindset for many.
Ipsos MORI research commissioned by the UK Consumer Insight Panel signals an abrupt drop in hedonism in 2021, with more people disagreeing with a ‘live for today’ mantra than agreeing, marking the first time since 1999 this has been the case.
Young people are much more likely to ‘live for today’, with the research showing 61% of Gen Z and 50% of millennials think this way, compared to 39% and 42% for Generation X and Baby Boomers respectively.
More than half (51%) of people in the UK believe financial wellbeing is about having a financial safety net, compared with 20% who think that it is about spending money. Furthermore, almost six in 10 (58%) say their spending will either remain the same or decline in the coming months; three quarters (75%) said the pandemic has made them want to save more to help protect themselves against risk and uncertainty.
The UK Consumer Insight Panel consists of Asda, Citizens Advice, Fairer Finance, Ipsos MORI, Kingfisher, Money Saving Expert, Nationwide Building Society, Resolution Foundation and Which?. It was established to provide insights and ideas to promote a fair economic recovery.
The panel is calling for more incentives to encourage people to make their homes greener to ensure the UK can meet ambitious green targets. It says reducing VAT on green products would encourage more people to invest in making their homes sustainable.
The panel is also calling for an increased focus on financial wellbeing, noting that those who are financially worse off have suffered most during the pandemic. In particular, it would like to see the regulation of buy now pay later (BNPL) schemes in order to protect consumers from getting into unmanageable debt.
It also says there’s an urgent need to address the growing scourge of fraud and scams and that online platforms should be given a legal responsibility, through the Online Safety Bill, to identify, remove and prevent fake and fraudulent content on their sites.
Joe Garner, chief executive of Nationwide Building Society, said: “The pandemic has acted as a reset button to a long-term culture of consumer hedonism. Lockdown has had a reversing effect on how we see our money – from a means to spend to a means of protecting ourselves against uncertainty and focussing on what’s important. As we look ahead to a brighter future, we want to capitalise on this cautiousness by seeing more work being done to help consumers spend safely and for the benefit of society.
“We must protect those who are struggling financially, as they have been disproportionately impacted by the pandemic and we cannot let them slip through the net. We must also stop the growth of online scams and fraud by working together as businesses and sectors. And we must do what we can to encourage people to see the benefits of making their homes more energy-efficient through building awareness and offering incentives. It remains one of the biggest challenges of our time.”
Ben Page, CEO of Ipsos MORI, said: “The public are not yet ready for a roaring twenties moment: prudence on saving and spending prevails and hedonist tendencies are at a 20-year low”.