The Bank of England is predicting a quick bounce back from the pandemic, with UK households having accumulated £150 billion of ‘Covid-savings’ that will now be re-injected into the economy.
This report finds that these Covid-savings are disproportionately spread across the country as people have experienced the pandemic in dramatically different ways.
People living in richer areas have been able to cut back and accumulate savings, whilst people living in less affluent areas have struggled to save as much, with some now facing a bigger debt burden. These differing experiences mean there will be implications for how quickly different places are able to recover.
Based on the above trends, this report analyses how Covid-debt and Covid-saving will shape post-pandemic cities, concluding that:
The report outlines four main areas for the Government to focus on to help those hit hardest by the pandemic to stay afloat:
Support people with their immediate spending needs, including extending existing support until at least the end of the year so the economy can readjust.
Support people to repay their debt through creating a debt-relief scheme specifically for those who have incurred Covid-related debt.
Protect people’s incomes by making the £20 Universal Credit uplift permanent and supporting a gradual phase-out of the Job Retention Scheme.
Level up for the long term: The Government needs to focus on creating more jobs and opportunities in cities and large towns in the North and Midlands to avoid people falling into debt in the first place, and to truly level up. To do this, people should be encouraged back into city centres and given upskilling and retraining opportunities so they can re-enter the labour market. The Government should then use the upcoming Levelling Up White Paper to set out measures to improve productivity in underperforming places.