Household spending boom to lift economy

THE outlook for the economy is rosier than first thought, a Bank of England official has said.

Michael Saunders told guests on an online webinar that economic growth in the second quarter will be stronger than the Bank had anticipated thanks to the rapid vaccination rollout.

He said: ‘The outlook for activity in quarter two is probably better than forecast. Covid infections, hospitalisations and deaths have continued to fall rapidly, while the vaccination program has continued at pace.’

He also believes households will rush out to spend once lockdown is lifted.

Figures show that families have strengthened their finances significantly due to forced restrictions on their spending, with the country accumulating a nest egg of £125bn.

His comments echo those made by Bank of England chief economist Andy Haldane, who said last week that the UK is on course for a rapid economic recovery.

Saunders’ comments come as retail sales figures bounced back in February. Sales rose 2.1pc last month compared with January when they fell 8.2pc.

The sales were driven by people spending on home improvements and outdoor furniture ahead of the summer in preparation for gatherings in gardens again.

Susannah Streeter, analyst at stockbrokers Hargreaves Lansdown, said: ‘With working from home, at least for part of the week, likely to be the new normal going forward, many employees have been trying to create a more permanent alternative to the kitchen table or corner of the bedroom. Dividing open-plan rooms and building garden offices are among the building projects being undertaken.’