Public’s appetite to save in decline since reopening of economy

People’s pent-up desire to spend money is being released – Bank of Ireland survey

Confidence about life in retirement has also strengthened, the bank’s survey found. Photograph: iStock

Confidence about life in retirement has also strengthened, the bank’s survey found. Photograph: iStock

 

Consumers’ attention has started to switch from saving to spending, with the appetite to squirrel away more money now in decline, according to Bank of Ireland.

The bank said 47 per cent of people surveyed for its savings and investment index said it was a good time to save in June. That compared to 55 per cent who said the same in May 2020. People’s pent-up desire to spend money is being released now the economy has reopened, it said.

Its finding follows a recent forecast from the Central Bank for a surge in economic growth later this year as households unleash up to €12 billion in “excess savings” built up during the pandemic.

However, Bank of Ireland said people were also keen to invest, with 36 per cent indicating they thought it was a good time to do so – the highest since the survey began and compared to just 23 per cent in February 2020.

“Government pandemic supports have bolstered consumer financial confidence, while a higher savings rate has provided an added layer of financial reassurance over the past year,” said Bank of Ireland chief investment strategist Kevin Quinn.

“But this quarter’s survey results suggest a shift in attitudes on saving, which is understandable as things reopen and there are more options to spend.”

Confidence about life in retirement has also strengthened, the bank’s survey found. In June 2021, 45 per cent said that they see life in retirement as quite or very easy. This compares to 36 per cent in February 2020. When asked about financial preparedness however, the change is less dramatic. In February 2020, 58 per cent saw themselves as prepared or somewhat prepared, which rose to just 61 per cent this June.

“Putting the financial part aside, it appears that lots of people have grown more comfortable about how they view life in retirement, perhaps a consequence of the very changed working and living environment of the past year,” Mr Quinn said.