Ready for a record 2021? David Wylie predicts a phenomenal spending rebound by the end of the first quarter 2021, as the brakes are taken off pent-up demand
2020 has without doubt been one of the most tragic years in living memory. The premature death and serious illness caused by the pandemic around the world will always be remembered by most people as the real tragedy and rightly so. Loved ones have been lost, separated or left scarred from their exposure to COVID-19, and my thoughts are with those families and their friends. There have been many other disastrous consequences of the pandemic, which will also be with us for a long time to come. Countries face eye watering mountains of (albeit cheap) debt that needs to be repaid, economic activity has been crushed, jobs lost, and fami - lies impacted by the crippling impact of such financial shocks. Stretched health services have been unable to maintain the momentum built up over the past three decades in combating chronic illnesses such as heart disease and cancer, and the lack of screening and treatment regimes is predicted to have a long lasting impact on survival rates. But, despite all of these challenges, the world will continue to turn and human nature will endure. Our desire to build,
innovate, provide for our loved ones and enjoy life to the fullest extent we pos - sibly can, will prevail. As the pandem - ic has shown us, life is fragile and too short to take for granted, time is of the essence. So, whilst acknowledging the sadness of 2020 and the likelihood that this horror still has some time to run, in anticipation of the imminent mass-vac - cination campaign, I would like to con - sider what 2021 will hold for us all. After all, life is for living! During this pandemic, tens of millions of us in the UK have had to put plans on hold, whether it be holidays, home improvements, a new car, discretionary spending and even university educa - tion. We have been locked away in our homes, unable to spend money and, in the vast majority of cases, either on full pay or on 80% furlough pay. This has created several anomalies: • Lower spending: No commuting costs, less childcare, no daily lunch and coffee spend, and of course, NO HOLIDAY! Those tens of millions who have remained in work (still by far the majority) have seen their cash pile up.
• Less debt: Many customers have apparently been using this period of relatively stable income and reduced outgoings, to pay down debt. Speak - ing with some of our UK customers, they have reported a drop in demand and an increase in collections. Whilst that may seem positive (and indeed it is so for personal debt levels) in actual fact it results in a reduced loan book for lenders who are seeking to grow their balance sheet. Indeed, to further illustrate this trend, the first lockdown saw some £7.4bn of credit card and loan debt paid off by UK consumers. • Pent-up demand: This is one surely we can all relate to. The thought of being able to get away for a holiday, enjoy a nice meal, upgrade the car, start those home improvements. All those things in most cases we could have afforded, but we haven’t been allowed to. Just this week, EasyJet reported a 50% surge in weekly booking numbers after US drug maker Pfizer announced their COVID-19 vaccine. Imagine what will happen when the immunisation program is in full swing and a return to normality begins.
Lower spending
Less debt
Pent-up demand
08 | Metrics Monthly
December 2020 | UK Edition
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