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Halfords said it has been ramping up supplies of bicycles as “unprecedented demand” extends into the autumn even after the end of the peak summer season.
The retailer, which also sells and fits car parts, was boosted by a surge in demand as many Britons stayed in the UK during the holiday period, with the pandemic restricting foreign travel.

But it said it had continued its strong growth into September – and is now recruiting for hundreds of motoring technician roles both at its stores and auto centres.

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£50 vouchers unveiled for cycle repairs

Halfords said it expected to report half-year profits of more than £55m, up from previous guidance of £35-40m – and the new guidance sent shares 20% higher.
The business has benefited from a trend towards staycations and also stands to grow sales for car parts as some motorists shun public transport and use their own vehicles for short journeys.

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Halfords said like-for-like sales rose by 22% in the five weeks to 25 September including a 46% increase for cycling products “reflecting the strength of our unique proposition and continual improvement in supply to meet unprecedented levels of demand”.

There was also a 7.5% rise for car products in its stores, as well as an 18% upturn in revenues from its autocentres.

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“With the substantial growth we have seen in our motoring services business across both retail and autocentres, we have launched a national campaign to recruit hundreds of skilled technicians,” Halfords said.
However it said it remained cautious on the outlook for coming months, with potential impact of rising coronavirus cases, the end to the furlough scheme and Brexit talks “very uncertain”.

Image: Halfords has benefited from people using cars for short journeys as well as cycling
The update comes after Bank of England chief economist Andy Haldane hailed the strength of the UK’s economic recovery – driven by robust consumer spending – while dismissing “Chicken Licken” pessimism about the future.
Russ Mould, investment director at AJ Bell, said: “It turns out that against Halfords’ expectations we are not a nation of fair weather cyclists after all.
“Having recently guided for the sales surge in bikes to wane as we head towards winter the company’s decision to raise guidance now shows it is continuing to see very strong demand.”

Google has unveiled its Pixel 5 smartphone – a 5G-compatible flagship device with a more affordable price tag – and an updated Nest smart speaker, alongside new services including Google TV.
Although the Pixel 5 had been announced earlier this year when Google unveiled the low-cost Pixel 4a phone, consumers are now being given their first look at the device and its specs.

The new handset’s stand-out feature isn’t its 6″ screen or 90Hz OLED display, but its significantly reduced price tag – coming in at £599 ($699), well below the £669 ($799) that the last generation Pixel 4 retailed at.

Image: The Pixel 4a was released earlier this year
Affordability seems to have been the key factor for Google when developing the new device, with 5G connectivity allowing users to connect to services off of the device, rather than rely on the impressive hardware itself outperforming market competition such as Apple’s iPhone – the latest of which is set to be unveiled next month.
Access to Google services has always been the Pixel’s main selling point, and a principal advertising image for the new phone shows it being used with a controller for Google Stadia – the company’s games streaming platform.

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A three-month subscription to Stadia Pro is bundled with the Pixel 5, as are subscriptions to some of the company’s other digital services.

“The global economic crisis will suppress the demand for smartphones for at least the next 12 months,” said Marina Koytcheva of analyst firm CCS Insight.

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“Google’s decision to address the weak market with a more affordable device is smart and timely,” Ms Koytcheva added at the time of the 4a launch, although the analysis holds up considering the Pixel 5’s price.
That said, Google had begun developing the affordable Pixel 5 before the coronavirus pandemic had struck – and it is mostly fortuitous that it could meet a consumer need for reduced spending.

Image: Google Nest Audio has been redesigned to improve sound quality
Google also announced a replacement for its Home smart speaker with the new Nest Audio, a recycled-fabric covered WiFi speaker which has been re-engineered to improve its sound quality.
It functions like any other smart speaker might be expected to, responding to voice commands to play music or control smart home devices – although Google’s speakers have significantly less market share than Amazon’s standard Echo.

Rolls-Royce has confirmed plans to raise £2bn from shareholders and billions more in debt as it battles to shore up its finances after a “sharp deterioration” caused by the coronavirus crisis.
The package includes “support in principle” from the government to extend an 80% guarantee for an existing £2bn five-year loan, which the struggling group wants to increase by up to £1bn.

Rolls-Royce has also agreed a separate two-year borrowing facility with lenders of £1bn and plans to tap bond markets for a further £1bn.

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‘An eye-watering loss’ for Rolls-Royce

Shares opened 7% lower after Rolls-Royce announced the plans, which will see existing shareholders offered new stock at a sharp discount to its previous closing price.
The stock had already collapsed by 80% in the year to date before the rights issue was announced.

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Rolls-Royce’s finances have been battered by a collapse in aviation caused by the coronavirus pandemic.

Airlines pay the company according to how many hours its engines fly. New engine deliveries have also slumped.

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In May, the Derby-based group said it was cutting 9,000 jobs as a result of the pandemic, with around 6,000 of these expected to be in the UK.
Last month, it reported a record half-year loss of £5.4bn.

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Rolls-Royce to axe 9,000 jobs

Announcing today’s cash call, chief executive Warren East said: “The sudden and material effect of the COVID-19 pandemic has had a significant impact on the commercial aviation industry.”
Mr East said there had been a “sharp deterioration in the financial performance” of its civil aerospace business and “to a lesser extent” its separate power systems business, which serves customers in marine and infrastructure sectors.

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“We are undertaking decisive and transformative action to fundamentally restructure our operations, materially reduce our cost base and improve our financial position,” Mr East said.
“The capital raise announced today improves our resilience to navigate the current uncertain operating environment.”
On Wednesday, Sky News revealed that Rolls-Royce had called off talks to sell a substantial stake in the company to Asian and Middle Eastern sovereign investors as it prepares to unveil the cash call to help it survive the coronavirus crisis, amid opposition from existing shareholders.

More than 7,500 UK financial services roles have been relocated to Europe as firms make final Brexit preparations, according to a survey.
EY’s Brexit tracker said more than 400 of the job switches have been announced in recent weeks, ahead of the transition period for leaving the EU coming to an end on 31 December.

The survey, tracking announcements made since the referendum, also found firms are transferring assets totalling more than £1.2trn from the UK to the European Union.

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Brexit: Truckers permit to enter Kent

Meanwhile, firms have been hiring for 2,850 new roles in Europe since the vote in 2016, EY said.
Financial companies including banks, insurers and asset managers have been opening new hubs or expanding existing sites in Europe as they prepare for the end of transition arrangements.

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Brussels has said it will only offer selective access for the City of London’s financial services under its “equivalence” system, an arrangement under which Britain’s finance regulations must be equivalent to the EU’s.

The jobs and assets migrating to Europe from the UK remains a fraction of the overall UK financial sector.

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But Omar Ali, UK financial services managing partner at EY, said there could be a “flurry of further staff and operational announcements” in coming weeks.

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Brexit bill passed with majority of 84

He added: “The clock is running down, and with the possibility of a second COVID-19 spike threatening cross-border movement in the final three months of the transition period, firms must now ensure that as a minimum they will be operational and can serve clients on the 1 January 2021.”
Dublin remains the most popular destination for new hubs, followed by Luxembourg, Frankfurt and Paris, EY said.

Britain’s benefits system is bracing for up to four million unemployed in the coming months as the economic fall-out of the COVID crisis accelerates.
The work and pensions secretary Therese Coffey told Sky News her department was preparing to support that level of unemployed, but said she “genuinely hopes” that we do not reach that figure.

On a visit to promote the new £2bn Kickstarter scheme to get young benefit claimants into work placements, Ms Coffey said that her department has taken the Office of Budget Responsibility’s (OBR) forecast and was planning around that scenario.
“I think we’re in a number similar in terms of being ready to help people and trying to help them get back to work as quickly as possible,” Ms Coffey said.

Image: Therese Coffey says her department is ready for an increase in claimants
“We’re bringing people into the organisation and in a COVID safe way in order to respond to the challenge.

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“I genuinely hope we don’t reach, obviously, that figure. But it’s important we are ready to help people.”

The number of people on universal credit soared during the first wave of the pandemic with 2.7 million people claiming by August, a 120.8% increase since March.

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The OBR has forecast joblessness could rise to 13.2% – equivalent to four million people – by next year.

Coronavirus recession: The 7 stats revealing how badly the economy is hurting

Ms Coffey said her department was ready for an increase in claimants and was “evolving our plans recognising how the economy works”.
The department will have hired 25,000 new staff in the year to March 2021 – a third increase – as it gears up to cope with rising unemployment, while also doubling the number of work coaches to help people retrain and find work in sectors not crushed by COVID-19.
“I think it’s fair to say the doubling of work coaches is a real investment in making sure we help people, many of whom will never have had benefits and may not have been unemployed or for a very long time,” she added.
“That might be putting their chosen career on hold, just for a couple of years while their sector recovers, but helping them get into some of the growth sectors – construction, other infrastructure, health and social care.”
Ministers are bracing for a spike in unemployment as the chancellor ends the £39bn furlough scheme and replaces it with a German-style wage subsidy plan.

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Sunak announces ‘job support scheme’

Under the new Jobs Support Scheme the taxpayer will no longer pay part of the wages of an estimated 3 million employees who could not work.
The Treasury will instead only subsidise people who are working at least a third of their usual hours – giving employers just weeks to decide which jobs in their businesses remain viable, with employees unable to work any of their normal hours ineligible for government support.
The chancellor last week warned that Britain faces a winter of rising unemployment and said his new multibillion-pound spending package – the Winter Economic Plan – would not be enough to prevent businesses going under and job losses.
Ms Coffey said: “We’ve never promised we could save every single job or every single company.
“We will do our best to try and help businesses keep going. But we have reached a point where we absolutely recognise we cannot pretend, we’ve never pretended, we can save every job.”
Young people are likely to be hardest hit by job losses threatened in hospitality and retail sectors, which is partly why the government has set up the Kickstart scheme for 16 to 24-year olds.

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The scheme, modelled on a programme that ran after the 2008 recession, is a big plank of the government’s “Plan for Jobs” set out in the summer.
Under the scheme, the government pays employers’ costs – national insurance, pension costs and wages – in return for companies offering young people six months placements.

TSB revealed on Wednesday it was to close 164 branches, with the loss of more than 900 jobs, as it accelerates the shift towards digital banking.
The announcement builds on a wider exodus from the high street by major UK banks since the financial crisis that has resulted in tens of thousands of job losses and customer complaints about lack of access to staff and services.

TSB pointed to a spurt in numbers using its digital banking services during the COVID-19 crisis as it continues to rebuild trust following the IT fiasco in 2018 that saw almost two million customers locked out of their accounts for weeks.

Image: A customer using the TSB Online banking app
The TSB branches below have been earmarked for permanent closure on the following dates:
Aberdeen, Bucksburn – May 20

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Aberdeen, Culter – February 10

Aberdeen, Dyce – May 26

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Aberdeen, Kincorth – June 16
Aberdeen, Mannofield – June 23
Aberdeen, St Machar – May 11
Aberdeen, Torry – February 4
Aboyne – January 20
Albrighton – January 12
Aldridge – February 25
Alexandria – May 11
Alford – February 9
Andover – June 24
Anstruther – March 10
Ascot – June 10
Banchory – February 16
Barnet – January 28
Barton-le-Clay – April 13
Bathgate – June 23
Bearsden – June 16
Benfleet – March 4
Berwick-upon-Tweed – March 3
Birmingham, Kingstanding – March 24
Birmingham, Sparkhill – April 28
Bishops Cleeve – February 24
Blackburn, Bastwell – January 26
Blairgowrie – May 5
Bolton, Daubhill – replaced by new city centre branch
Bolton, Horwich – replaced by new city centre branch
Bo’ness – June 30
Bournemouth, Christchurch Road – February 17
Brighton, West Street – June 30
Broxburn – March 2
Buckhaven – March 30
Burford – May 10
Burnt Oak – May 27
Burntisland – February 16
Campbeltown – February 18
Canterbury – February 3
Canvey Island – April 22
Cardiff, Clifton Street – March 17

Track the UK economy’s recovery from lockdown

Carnoustie – April 15
Castle Douglas – January 19
Cheddar – March 31
Chesterfield – April 7
Chippenham – March 24
Chipping Norton – June 29
Church Stretton – May 12
Cinderford – January 27
Coatbridge – June 10
Cockfosters – April 22
Coupar Angus – February 3
Cowdenbeath – April 20
Crieff – June 30
Cumnock – June 1
Cupar – June 1
Dalkeith – February 11
Devizes – April 1
Dingwall – June 2
Dorchester – April 28
Dundee, Craigiebank – January 13
Dundee, Lochee – March 11
Dunmow – May 13
Dunoon – January 28
Durham – May 12
Dursley – March 4
Edinburgh, Corstorphine – June 8
Edinburgh, Gorgie – March 18
Edinburgh, Pilton – January 26
Ellesmere – February 10
Girvan – February 2
Glasgow, Anniesland – April 20
Glasgow, Dennistoun – February 10
Glasgow, Drumchapel – June 17
Glasgow, Easterhouse – May 5
Glasgow, Partick – February 17
Glasgow, Springburn – June 22
Glynneath – February 11
Grangemouth – January 14
Grantown-on-Spey – January 20
Great Missenden – March 17
Haslingden – January 20
Hawick – June 2
Hayling Island – June 9
Hebburn – February 18
Helensburgh – January 13
Hitchin – June 3
Holt – June 17
Horden – February 23
Hucclecote – June 23
Hull, Hessle – April 14
Hungerford – May 19
Huntly – February 24
Ilkley – May 27
Insch – January 21
Ipswich, Hadleigh – May 6
Johnstone – April 6
Kelso – January 21
Kilbirnie – February 24
Kilsyth – May 18
Kirkcaldy, Templehall – April 27
Largs – April 26
Larkhall – April 7
Leek – January 13
Leigh-on-Sea – June 9
Liverpool, Heathfield – June 8
Liverpool, Waterloo – March 3
Lochgilphead – February 17
London, Acton – April 29

Where jobs have been lost in the UK economy

London, Eltham – May 13
London, London Wall – January 12
London, Putney – April 14
Long Sutton – March 11
Lymington – February 4
Malton – June 24
Malvern – June 15
Manchester, Cheetham – April 21
Manchester, Irlam – May 25
Manchester, Radcliffe – February 3
Montrose – March 10
Murton – March 10
Nairn – March 17
Netherfield – April 29
North Berwick – January 19
Northampton, Abington Street – June 16
Nottingham, Low Pavement – May 20
Nottingham, Mapperley – February 23
Old Hill – May 26
Peebles – January 27
Penicuik – June 15
Peterborough, Millfield – January 14
Petersfield – April 8
Pitlochry – February 25
Plymouth, Crownhill – January 27
Port Glasgow – June 9
Prestatyn – March 23
Prestwich – April 28
Prestwick – March 2
Princes Risborough – March 31
Ramsey – March 23
Renfrew – May 18
Richmond – March 16
Rosyth – March 25
Rothesay – March 9
Royal Wootton Bassett – March 24
Saltcoats – March 30
Sawbridgeworth – June 3
Skegness – April 1
Skelmersdale – May 4
St Austell – April 21
Stratford-upon-Avon – May 4
Sutton – May 6
Tadworth – March 25
Thornliebank – May 25
Turriff – March 4
Waltham Abbey – March 31
Ware – February 2
Warrington, Orford – May 19
Wells – May 19
Whitby – June 2
Wick – March 16
Winchester – May 26
Winslow – April 21
Wotton-under-Edge – March 18

A delayed ban stopping businesses from handing out plastic straws, stirrers and cotton buds to customers comes into force today in England.
April had been the original deadline for the new legislation, which stops the sale and distribution of the single-use plastic items. But, coming in the midst of the COVID-19 pandemic and given its impact on supply chains, the government decided to postpone the ban until now.

From today, it is illegal in almost all circumstances for businesses to give them out to customers with exemptions in place to protect disabled people and those with medical conditions who require plastic straws.
Despite the delay, Environment Secretary George Eustice says Number 10 is “firmly committed to tackling” the problem of single-use plastics.
“The ban on straws, stirrers and cotton buds is just the next step in our battle against plastic pollution and our pledge to protect our ocean and the environment for future generations.

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“We are already a world-leader in this global effort. Our five-pence charge on single-use plastic bags has successfully cut sales by 95% in the main supermarkets, we have banned microbeads, and we are building plans for a deposit return scheme to drive up the recycling of single-use drinks containers.”

Pre-pandemic, Defra says the UK was getting through almost five billion straws annually, 316 million plastic stirrers and 1.8 billion cotton buds.

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While it’s a step in the right direction, green campaigners like John Read, founder of Clean Up Britain, argue it’s the tip of the iceberg.
“I think the government do deserve some credit for nudging people’s behaviour in the right direction but actually when you look at it, it’s really more piecemeal and symbolic than anything else.
“We need to change people’s behaviour in a sustainable and permanent way, we need to see a national behavioural change campaign and that’s what we haven’t got in this country at the moment.
“People have got to understand that when they throw away plastic straws, hamburger packets, crisp packets, it’s all their own personal pollution… so people understand that they’re doing the damage to the environment.”
Sadly there’s now a new villain in town: disposable PPE.
Worn once, unable to be recycled, single-use by design.

Image: A gull with a disposable face mask tangled around its legs
The RSPCA’s Head of Wildlife Adam Grogan says the charity is increasingly being called out to animals who’re getting caught up in it.
“We are seeing an increase in numbers of animals getting caught up in things like masks… they’ve got their legs or other parts of their bodies entangled in things like the elastic bands that go over the ears.
“This proposed legislation coming in about singe use plastics should help us to refocus on the fact that the pandemic has created another set of single use items that actually we don’t need to use, especially we can use reusable items a lot of the time.”

One of the top executives at Standard Chartered, the emerging markets lender, is to join Greensill next year as the supply chain finance provider strengthens its top ranks.
Sky News understands that Tracy Clarke, who is stepping down as the bank’s chief executive for Europe and Americas and the head of its global private banking operations, is to become a non-executive director of Greensill in January.

The appointment of Ms Clarke, who has worked for Standard Chartered for 35 years, is expected to be announced later this week.

Track the UK economy’s recovery from lockdown

It is expected to be unveiled alongside that of Patricia Russo, the chair of Hewlett Packard Enterprise, as a senior adviser, according to insiders.
Ms Russo also holds seats on the boards of major US companies including GM and KKR, the private equity giant.

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The recruitment of the two senior businesswomen will come as Greensill continues to expand its operations beyond its core supply chain finance business.

The UK-based fintech group, which counts the former prime minister David Cameron as an adviser, provides working capital to business customers around the world.

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Greensill, which was founded in 2011 by the Australian financier Lex Greensill, provided more than $143bn to more than 10 million customers and suppliers last year, according to the company.

Where jobs have been lost in the UK economy

The flow of such supply chain finance has become increasingly important during the pandemic, particularly for small businesses which have been hurt by an acute cashflow squeeze.
Earlier this year, providers of working capital held talks with the Treasury and Bank of England about the creation of a programme to aid UK SMEs during the coronavirus crisis.
The government eventually decided against launching the scheme.
Greensill’s clients in the UK include the NHS, for which it offers an instant-pay service to frontline workers called Earnd.
The company is one of the largest fintech businesses in Britain, reaching a $3.5bn valuation last year when it raised $1.4bn from investors led by SoftBank’s giant Vision Fund.
Greensill declined to comment on the two new appointments.

Rolls-Royce Holdings has called off talks to sell a substantial stake in the company to Asian and Middle Eastern sovereign investors as it prepares to unveil a £2bn cash call to help it survive the coronavirus crisis.
Sky News has learnt that the aircraft engine manufacturer abandoned negotiations with sovereign wealth funds in Kuwait and Singapore in the last few days amid opposition from existing shareholders.

City sources said that Rolls-Royce had been warned by institutional investors that they were unhappy about seeing their interests in the company diluted by a £500m placing to Kuwaiti and Singaporean sovereign wealth funds.

Track the UK economy’s recovery from lockdown

Barring a last-minute hitch, the company, which has seen its balance sheet and share price hammered by the COVID-19 pandemic’s impact on global air travel, will announce a comprehensive plan to shore up its finances on Thursday morning.
A source close to Rolls-Royce’s lenders said the financing package was likely to include additional borrowing headroom as well as roughly £2bn of new equity.

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Lenders including BNP Paribas and HSBC are understood to be involved in the cash call, while Goldman Sachs is also advising Rolls-Royce’s board, which is chaired by Sir Ian Davis.

Other elements, the details of which were unclear on Wednesday evening, are also understood to form part of Rolls-Royce’s board’s plan.

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One insider said that the balance sheet strengthening had been engineered on the basis that the downturn in the aviation sector could get steeper in the coming months.

Image: Rolls-Royce announced plans in May to cut 9,000 jobs globally
Rolls-Royce has already announced plans to cut 9,000 jobs as a result of the pandemic, but has insisted that it has a liquidity cushion of as much as £8bn.
Analysts, however, have warned that it could burn through that cash within a year.
The government has been closely monitoring the company.
Rolls-Royce is a rarity in corporate Britain because of the state’s golden share, which gives Whitehall a veto over certain strategic decisions.
It remains possible that the government could inject funding directly into Rolls-Royce, although it was unclear on Wednesday whether that formed part of the immediate plan.
The talks with overseas sovereign funds had involved up to £500m of new shares being allotted to them.

Where jobs have been lost in the UK economy

A Rolls-Royce spokesman declined to comment on the talks with sovereign investors.
In its most recent statement about its prospective cash call, it said: “We continue to review all funding options to enhance balance sheet resilience and strength.
“Amongst other options, we are evaluating the merits of raising equity of up to £2.5bn, through a variety of structures including a rights issue and potentially other forms of equity issuance.
“No final decisions have been taken as to whether or when to proceed with any of these options or as to the precise amount that may be raised.”
The scale of the share price slump at Rolls-Royce – its valuation has fallen by more than 80% in the last year – means that a £2bn cash call would involve the company raising the majority of its entire market capitalisation from the sale of new shares.
On Wednesday, shares in Rolls-Royce closed at just 130p, giving the company a paltry market capitalisation of £2.7bn, and raising the prospect that it could ultimately be demoted from London’s blue-chip FTSE-100 index.

A very interesting statistic lurks within the National Accounts, published on Wednesday, which revealed that the UK economy contracted by 19.8% during the second quarter of the year.
The Office for National Statistics (ONS) disclosed that the UK household savings ratio during April to June – the height of the COVID-19 lockdown – surged to 29.1%.

In other words, for every £100 received by a household – which includes salaries, benefits and any other income, such as dividends or interest – some £29.10 of that was saved.

Image: The household savings ratio from 2008 to June 2020. Source: ONS
The figure is absolutely extraordinary because, by and large, Britons are lousy savers compared to most of the developed world.
Even households in the US, a country widely assumed to be hooked on consumer spending and cheap credit, have typically saved more than British households in recent years. Only Australian households, among developed economies, are as spendthrift as those in Britain.

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It is a trend that has accelerated during recent years. During the 1980s, UK households saved at least 10% of their income in all but one year of the decade – behaviour that persisted for most of the 1990s.

The household savings ratio began to fall in the late 1990s, when credit became more easily available, only rarely rising above 10% since then.

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Track the UK economy’s recovery from lockdown

Between 1998 and 2007, the average was 8%, although this rose during the period around the financial crisis.
Since then, the ratio has continued to be comparatively low.
During the second quarter of 2018, for example, the ratio stood at just 5.9% and, during the second quarter of 2019, it was 6.8%. Slightly further back, in the first quarter of 2017, it fell to just 4.7%, a level not seen since the 1950s, a decade in which consumer spending took off as incomes rose and many previously rationed items became available again.
So for the figure to surge to a point where UK households are saving more than a quarter of their income is quite remarkable.
On the face of it, the explanation is obvious. The second quarter of this year saw most UK households in lockdown, with most shops, bars, hotels and restaurants closed. There were just not enough opportunities to spend money.
The ONS calculates that, during the quarter, households cut their spending by a record £80.5bn.
It added: “This is over nine times greater than the previous largest quarterly fall in household spending of this type. The reduction in spending is driven by large falls in expenditure on restaurants and hotels, transport – particularly air transport and motor vehicles – and recreation and cultural services.”
At the same time, while household spending fell sharply, household incomes did not fall at the same rate thanks to government support from programmes such as the Coronavirus Job Retention Scheme – or furlough scheme – and the Self-Employment Income Support Scheme.
But that is only part of the picture.

Where jobs have been lost in the UK economy

Another factor, well established over previous economic cycles, is that households save more during times of uncertainty and especially during recessions.
For example, the last big notable increase in the savings ratio was during the global financial crisis and the immediate aftermath, when it rose from 6.5% during the third quarter of 2008 to 12.2% during the first quarter of 2010. Similarly, the savings ratio rose during the recessions of the early 1990s, the early 1980s and the mid-1970s.
Much of this is psychological. If people think they are at risk of losing their job, or if they are concerned that the value of their home – the biggest single financial asset for most households – is going to fall, they will save more.
Similarly, as unemployment fell in 2017 to its lowest level for 45 years, so did the household savings ratio.
All this means that, in coming months, the household savings ratio will be an indicator watched even more closely than usual by economists as they try to establish what is likely to happen next in an economy traditionally heavily geared to consumer spending.
Allan Monks, economist at JP Morgan, told clients today: “Key to the outlook is the extent to which the saving rate will remain higher than usual due to voluntary saving, which reflects household caution over spending.
“It is too early to judge where things are settling, but the still very low level of consumer confidence suggests the saving rate is unlikely to return to its pre-pandemic level of just over 6%.
“While greater caution reflects fears over the virus, this is being compounded by concerns over a large rise in unemployment.”
There are already signs that Britons will struggle to stick to the savings habit.

COVID-19: Which sectors may not survive?

The Bank of England reports that, in July, household borrowing rose for the first time in four months. The level of bank deposits also returned to more normal levels, indicating that, as lockdown ended, consumers began spending again, having saved aggressively in the preceding months.
And there will also be other disincentives to save, chiefly the fact that the Bank of England’s key policy rate is an all-time low of 0.1%, making it impossible for banks, building societies and other savings institutions to offer a meaningful savings rate.
Government-backed National Savings & Investments, an institution also favoured by many savers, has just slashed its rates.
While the spike seen this year in household saving is due to extreme circumstances, many people will hope that the savings habit becomes more established, even once the pandemic is over.
Industry estimates suggest that only around three in 10 working people have savings worth the equivalent of three months’ income or more, while as many as 12 million people – more than a third of the UK’s working population – are not saving enough for their retirement.
As Tom Selby, senior analyst at the stockbroker and investment platform provider AJ Bell noted today: “With lockdown strangling the ability of Britons to spend and the government’s furlough support scheme working to protect jobs and wages, it was inevitable those people lucky enough to remain employed would save more as a result.
“For those who are in this position it is vital they use this opportunity to pay off any high cost debts and build up a decent cash buffer if they haven’t already done so.”
Depressingly, there is already evidence to suggest that this extraordinary figure does not mark the renaissance of a savings culture in Britain. The Bank of England has recently highlighted a sharp divergence in behaviour, with households with incomes of less than £35,000 running down their savings during the lockdown, while households with more than £35,000 increased their saving.

Should Bank of England consider negative rates?

Moreover, as the furlough scheme comes to an end, a rise in unemployment is inevitable, forcing growing numbers of people to run down what savings they have.
If the household savings ratio does remain at higher than usual levels, potentially weakening consumer spending, there are levers that the authorities can pull to try and change that behaviour.
The most striking of these would be a move to negative interest rates.