Richest households save £4,000 from lockdown - and poorest save £636

1 June 2020

Even the least well-off homes have cut spending by £636 on average

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The coronavirus lockdown has caused the richest households to save up to £4,181, while even the least well-off may have been able to spend £636 less, figures reveal.

The savings have come from individuals spending less on holidays, going out, sport, travel and commuting due to spending more time indoors to fight the outbreak.

The 5.5 million homes in the top income bracket will have avoided £23 billion in normal expenditure if lockdown lasts for three months, according to the New Policy Institute (NPI) think tank. Those in the bottom bracket have £3.5 billion extra.

The average possible savings per household are £4,181 and £636 respectively.

The savings only apply to households that have not seen a fall in income; anyone who has suffered redundancy, been furloughed or lost work are unlikely to have saved this much if at all. 

The NPI says £23 billion is equal to 4.5% of UK GDP over three months, or almost half (48%) of what government gets from taxpayers during the same period.

An NPI spokesman says: “The coronavirus emergency has, quite rightly, brought close attention to excess deaths. But another extraordinary feature of the lockdown is that it has forced the better off segment of the population still in work to save a lot more than they usually would.” 

On paper the total amount of unspent money could reach £57billion. However, not all of that cash will have been saved. Grocery shopping costs may have risen, and some of the money might have been used to pay off debts.

The NPI says these household savings figures are a sign of an unbalanced economy and the debt government is racking up to keep households and businesses afloat.

It suggests the government could increase higher rates of income tax, implement a savings tax or ask individuals to lend it money through a Coronavirus Bond, which could be designed by National Savings and Investments.

Previous Moneywise analysis of household spending data found families could save £180.81 a month each from staying home more during the lockdown.

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