Locked-Down U.K. Households Boost Savings Most on Record

(Bloomberg) --

British savers increased their bank deposits by a record amount in March and April as the coronavirus pandemic shut shops and put millions of people in fear of losing their jobs.

Households added more than 30 billion pounds ($38 billion) to their bank accounts over the two months, according to Bank of England data published Tuesday that go back to 1997. More than 16 billion pounds of that was in April, the toughest lockdown month. Figures for May haven't yet been released.

The surge raises the question of whether consumers will go on a spending bonanza as lockdown rules ease and shops reopen, or if they'll hold back until it's clearer how hard their income will be hit by what's likely to be the deepest recession in three centuries.

Their response will help determine the pace of the U.K.'s rebound and influence how much support the government and the Bank of England continue to offer.

Prime Minister Boris Johnson's administration is weighing options to bolster the economy as it prepares to gradually withdraw its vast support package in the months ahead, according to people familiar with the matter. The central bank, meanwhile, is widely anticipated to boost its monetary stimulus as soon as this month.

Barclays estimated this week that the economy is now running at 85% capacity and household spending is just 5% off its normal level, but said activity will probably remain below pre-virus levels. It predicts consumers will maintain higher savings, while the current bounce in manufacturing and construction will lose steam and supply-chain disruption will drag on the economy.