// The UK economy could reach pre-pandemic levels in early 2022 if households spend lockdown savings
// UK households have built up record levels of savings during the Covid-19 pandemic
The Bank of England has stated that the economy could hit pre-pandemic levels in early 2022 if households start spending the £125 billion in pent-up savings.
UK households have built up record levels of savings during the Covid-19 pandemic, saving up to five times as much as in any other nine-month period on record.
At least £6.25 billion of pent-up savings is expected to be spent, particularly as the vaccine is rolled out.
The Bank of England said the amount lost by the economy since the end of 2019 will be made up within 12 months, despite the last 10 months of restrictions and lockdowns.
The bank’s governor Andrew Bailey said it was likely that savings would continue to grow in the first half of 2021.
“That £125 billion figure is likely to rise substantially further over the first half of 2021,” he said.
“One of the things we deliberated a lot on this time is the pace in which they are used in the recovery phase. There is a risk that it could be larger. So it’s an upside risk.”
The bank’s research found that most people expected life “to return to normal” within a year due to the roll-out of the vaccines.
It predicted the vaccine programme would allow for most restrictions to be lifted by April before further rollout over the summer, which would allow for their full removal by September.