Britons built up £1.7 TRILLION in savings but now families torn between holidays and bills

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A mini-boom in holiday bookings was welcomed yesterday by Chancellor Rishi Sunak who said the surge was “absolutely fantastic” and will drive Britain’s economic recovery. With a National Insurance increase in April and rising energy and food bills, many families have been fearful to spend their stored-up money. But with a record £1.7trillion stashed away ‑ equivalent to £412 a month per household ‑ there are cautious signs that spending will now rise.

Travel operators yesterday reported an increase in bookings for summer holidays. The hospitality and retail sectors are also hopeful spending will increase as the Omicron wave passes.

Mr Sunak welcomed the support for the travel sector. He said: “It’s absolutely fantastic to see a surge in bookings following the relaxation of our travel requirements, giving a much-needed boost for the travel industry and helping drive forward our economic recovery from Covid.”

Savers have tucked away £266billion since the pandemic began because of the tough restrictions that saw shops and restaurants close, analysis from investment management firm Bowmore Financial Planning revealed.

And the value of savings has risen by £11.5billion a month since the start of 2020, compared to just £4.6billion a month in the two years before.

And it is estimated the overall cash pile for the nation has reached £1.7trillion (a trillion is a thousand billions).

Mark Incledon, chief executive of Bowmore Wealth Group, said that the Chancellor’s September 2021 announcement of a rise in National Insurance rates is likely to have contributed to the increase in household savings.

He said: “When people are concerned about taxes rising, they save more and spend less. I think we’ve seen that happen in the last couple of months.

“The loosening of travel restrictions over the summer meant less saving and more spending for a lot of households. That reversed sharply in the autumn as people worried about the cost of the National Insurance rise, as well as other tax increases that could be around the corner.”

Households face record price rises on their energy bills after the regulator Ofgem reviews the price cap next month.

Despite this, the Bank of England expects the boom in household savings during ­lockdown to help power a faster economic recovery.

Retail expert Richard Hyman said: “I think that accumulated savings have allowed people to have more spending money and that was reflected over Black Friday and Christmas.

“However, stock shortages, supply issues and last month’s restrictions put a bit of a spanner in spending. Into the New Year it will be similar.

“People do want to spend but at the same time many are cautious. They understand that some of the money they accumulated might be better used to set aside.

“It’s going to be a very challenging year for household budgets. The cost of living will increase faster than wages, and many can see that looming.”

Kate Nicholls, UK Hospitality chief executive, urged the Government to help keep prices low so consumers with savings can support the sector.

She said: “Some hospitality businesses will struggle to survive the first quarter of 2022 and those that do make it through face a cliff edge in April when VAT is set to return to 20 percent, alongside a rise in business rates and labour costs.

“The Government must lift the remaining restrictions as soon as possible and support the industry, and the jobs it provides, by keeping the hospitality and tourism VAT rate at 12.5 percent and reducing rates bills in 2022/23.

“This will help keep prices low for consumers and enable those that can to continue to support the hospitality businesses that form the heart of communities they serve.”

Travel bosses have tried to draw in consumers by unleashing a sales bonanza following the Government’s announcement on Wednesday that pre-departure PCR tests would be scrapped.

Firms have reported a surge in flights this week with prices currently up to 71 percent cheaper than before the pandemic for some destinations for UK travellers.

Spain, the US, Greece and Turkey are among the top getaway spots for summer holidays with millions of families prepared to spend money saved during lockdown.

Martyn Sumners, of the Association of Independent Tour Operators, said: “They need to have confidence and trust in those they are booking with. An independent agent provides them with that knowledge and reassurance.

“Our AITO Travel Insights Survey highlights that most people have saved the money they were unable to spend in lockdown to use on holidays as soon as they were free to travel.

“They are really looking at those bucket list trips. They will definitely spend more this year.”

See the latest Covid vaccine stats below and visit InYourArea for all the Covid vaccine latest

Industry bosses said consumer confidence has rebounded partly due to the successful rollout of booster vaccines.

Hays Travel, the UK’s largest independent travel agent, revealed more than half of customers booking holidays are new.

Dame Irene Hays, owner and chair of Hays Travel, said: “We have already seen a significant increase in enquiries across all our divisions, in branches as well as online. It is early days in the peak time for booking holidays, but it’s clear there’s still huge demand and that people are looking forward to being able to go away this year.”

The popularity of staycations shows no signs of slowing either with domestic UK holiday providers reporting a rise in ­reservations and enquiries.

Comment by Nigel Thompson, Daily Express Travel Editor

The brakes are off and 2022 foreign holidays are thundering down the runway thanks to restrictions easing and more simplified and less costly testing.

It has been a hideous 22 months for the pandemic-battered UK travel industry and long-suffering holidaymakers ‑ but at last it does look like there is light at the end of this miserable Covid tunnel.

And that light is very much looking like some dazzling, hot sunshine for that fabulous break we all need this summer!

Even better, tour operators are wooing us with fantastic deals to book right now. Seriously, the value out there is sensational, see above.

So get down to your local high street travel agent this weekend or go online and bag a bargain ‑ there’s a sun lounger by the pool or beach with your name on it.

Remember, travellers from other cooler climate Northern European nations will be booking now too, so don’t delay to get the best bargains.

One note of caution ‑ we are still in somewhat uncertain times so I highly recommend buying a package holiday with the security of UK Civil Aviation Authority’s Atol (Air Travel Organiser’s Licence) protection.

This helps you if your travel company, airline or hotel happens to go out of business.

If you are arranging your own separate flights and hotel, it’s always wise to pay on a credit card. You are covered for up to £30,000 under the Consumer Credit Act, though this may not apply to bookings made via a third party.

Never go abroad without a suitable travel insurance policy and it’s sensible to buy one with extra cover for coronavirus just in case. Get it in place as soon as you book your getaway.

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