Shoppers crack open their piggy banks to go on a spree

SHOPPERS are starting to loosen the purse-strings again – swapping from saving cash to spending it.

People squirrelled their money away during lockdown but as the restrictions have slowly eased there are more opportunities to shop.

Bank of Ireland’s chief investment strategist Kevin Quinn said: ‘As the country has begun the process of re-opening, we’ve seen a very understandable shift in attitudes to both saving and investing. Following the resilience shown in Quarter 2, our survey data has reverted back towards pre-Covid levels.

‘Attitudes to savings have weakened as might be expected as consumers began to spend again and the effect of income supports begins to fade.

‘Equally we’ve seen attitudes to investing weaken somewhat despite some very impressive gains in particular in equity markets over the past three months, with many hitting new highs. The main explanation for this rests in the most significant concern being voiced by respondents – worries about the impact of a second wave of Covid-19.’

The bank’s research found consumers have begun to save less and spend more. Compared to the full lockdown, when savings increased significantly, people are no longer saving ‘by default’ and a series of factors are influencing a return to normal. As the economy fitfully reopens there is more opportunity to spend and less surplus income from measures such as Covid-19 payment schemes and mortgage breaks leading to a return to more normalised patterns of expenditure.

Secondly, when it comes to investing, consumers are continuing to invest but their attitude to investing is back to pre-Covid levels.

Bank of Ireland’s Savings and Investment Index revealed the changing attitudes of Irish consumers as the economy begins to re-open. The Savings Index fell from 106 to 101 in the third quarter of the year, marginally higher than the pre-Covid February result of 99. The percentage of people saving fell to 46% in Q3, from 51% in Q2. There was a drop in those who think it’s a good or very good time to save (down from 55% in Q2 to 49% in Q3) but still well ahead of Q1 levels (38%).

Kevin Quinn added: ‘Given the emergence from lockdown, we’d expect to see an increase in consumer spending and a consequent reduction in savings. Constrained spending habits in the lockdown period have begun to shift back to pre-Covid levels but there remains scope for this to increase quite a bit more. Subdued consumer confidence and concerns about a second wave however will act as a dampener on the pace of normalisation.’

‘Reduction in savings’