On March 23rd, a poll conducted by Redfield & Wilton Strategies found that members of the public were deeply pessimistic about the economic future of the country; an incredible 64% of respondents either said ‘they were worried and thought there will be recession’ or that they were ‘extremely worried and expecting the worst’.
Just hours later, Prime Minister Boris Johnson imposed new, restrictive lockdown measures on the United Kingdom. The lockdown would have huge ramifications not only on how those living in the UK interact with their friends and family, but also on their ability to earn money and, just as crucially, to spend it.
After 12 weeks of strict restrictions, the country is beginning to emerge from lockdown. People now have greater opportunities to return to in-person work and to spend their earnings in newly re-opened non-essential shops, as of Monday 15th June, and (potentially) pubs and restaurants, from Saturday July 4th. The ending of lockdown signifies the start of assessing the economic damage it has caused.
Many have claimed that the end of lockdown means the start of an economic boost as individuals return to spending, but now that the public have more opportunities to loosen the purse strings, will they take them?
A poll conducted by Redfield & Wilton Strategies this past week found that employed individuals are overall optimistic about their job security with 52% thinking it is very likely they will be employed by the same employer at the end of the year and 25% thinking it is likely.
Of the 7% of respondents who are currently unemployed, just over half (58%) think it is unlikely or very unlikely they will be employed at the end of August. Those that are employed are optimistic that their current job will weather the coronavirus storm, while those that are unemployed are doubtful that they will find employment in the next couple of months.
Those that are currently employed or self-employed are optimistic about their salaries/income too, with over half (58%) thinking it is likely or very likely that they be earning an equal or better salary/income by the end of the year. This figure suggests that most of the employed public is hopeful that they will not have to take a wage cut or reduction in hours due to the coronavirus crisis.
Given earlier fears about the national economy, is this a newfound optimism for the economy?
Not exactly. Whilst earlier polls have demonstrated pessimism towards the future of the national economy, individuals have shown a relatively higher degree of optimism for their own financial situations. Our poll conducted on 23rd March found that 11% of respondents viewed their own financial situation as ‘dire’ and in need of ‘serious financial assistance.’ In a poll conducted by Redfield & Wilton Strategies on April 26th, a month into the lockdown, this had decreased to 4%. When asked about their overall personal financial situation over the next three months, only 6% believed their financial situation would significantly worsen.
Of course, it is likely too early to fully assess or speculate what the financial effects of the pandemic will be, but many hope that the easing of lockdown and reopening of the retail sector will allow spending to resume, kick-starting the economy.
Since shops reopened on Monday 15th June, however, 78% of respondents say they have not visited a non-essential shop. Rates were slightly higher in London, where 41% have visited a non-essential shop, but in every region polled, the majority have not ventured into newly reopened retail outlets. On an encouraging note, of the fifth (22%) of respondents who have been shopping, 84% said they would non-essential shop again this month, suggesting that those who have taken up the new shopping opportunities feel safe enough to do so again.
It’s important to note that non-essential shops opened Monday 15th June and this poll was conducted on Thursday 18th June and thus, does not cover a weekend when we would expect there to be more shoppers. However, of those who have not been out shopping this week, 69% say they won’t be out shopping at all this month. There is some variation between the age groups, with 50% of 18-24 year olds saying they won’t be going out shopping compared to 77% of those 65+. However, across age groups, a significant number of respondents say they will not go out shopping in the next month.
So if many people feeling generally positive about their personal financial future but are not going out shopping, perhaps they are spending money in other ways? Again, this isn’t really the case either. Overall, 49% of respondents are spending less now than they were before the pandemic, 32% are spending about the same, and only 16% are spending more. Despite some sense of financial security, respondents are not taking the opportunity so far to loosen the purse strings and spend in the way many had hoped would come with the easing of restrictions.
And only a third (37%) of those who have been spending less attribute this to financial concerns with 61% saying that there are other reasons impacting their spending habits. In part, this decrease in spending could exist because the nature of lockdown has reduced work-related expenses for many, including travel, meals and social events associated with seeing friends and colleagues.
Spending is not just being reduced in the retail sector. As we enter the summer months, millions of Brits would be preparing to travel for holidays both abroad and domestically; only 30% of respondents in the poll conducted this past week said they had not intended to book a holiday at all this summer. Now only 30% say they are booking a holiday this year, with 14% saying they are trying to book abroad and 16% booking a staycation. For those that are not booking a holiday abroad this year, only 10% said their primary reason for not booking was due to finances, citing concerns about catching the coronavirus on the plane or in another country.
The UK Government hopes to allow the reopening of pubs and restaurants on July 4th as part of their roadmap out of lockdown. About a quarter of respondents indicated that they will visit a pub in the week following the re-opening of pubs.
Overall, the majority (57%) of respondents believe that the two-metre social distancing rule should remain in place if the pubs are permitted to reopen. However, the majority (52%) also admit that whether the two-metre rule remains will have little impact on their likeliness to visit a pub.
Despite the majority of employed or self-employed individuals feeling optimistic about the future of their job, income, and overall personal financial future, the post-lockdown spending spree isn’t happening yet. People are spending less, but not due to financial concerns. And if people are spending less, then they may even have saved more, leading to an increase of spending in the future.
If the UK Government wants the immediate post-lockdown spending boom it had hoped for in both the retail and hospitality sectors, Ministers will have to find ways of easing the health concerns of the public. After months of telling the public to ‘Stay at Home, Protect the NHS, Save Lives’, the Government must coax the public outside to kickstart the economy in time for summer.
However, when the majority of the public admit that the two-metre rule will not affect their likelihood of visiting restaurants or pubs and the public are still unsure about making masks compulsory in all indoor spaces, it’s not clear yet how this can be achieved. It is possible that the longer the shops and pubs are reopened, the safer people will feel and will come out and spend without Government encouragement. But at the moment, optimism that personal financial futures are secure is not yet being reflected by spending.
