New Data from the Office for National Statistics illustrates the UK’s economic recovery as activity from various economic agents has increased.
One piece of data shows the impact of the relaxation of COVID-19 restrictions on retail footfall levels.
The ONS reported that in the week commencing the 17th of April, footfall levels increased by 31%, making them 75% the equivalent of 2 years ago.
95% of adults who were also asked in a survey reported that they have left home, 20% of adults reported that they had left for non-essential purposes, thus marking a 6% increase.
All of these factors are illustrating an increase in confidence, consumers are going out and spending as COVID restrictions have been lifted, consequently, footfall levels have risen and the number of people leaving their homes has also increased.
Another piece of data that further proves that the confidence of consumers has increased is the recent rise in debit and credit card usage.
The ONS reports that the CHAPS-based indicator of credit and debit card purchases for delayable goods has increased by 26% in the week commencing 15th of April.
This places the current level at 89% of February last years average
An increase in credit card payments is significant as it shows that consumers are much more willing to take on debt.
This is important because if consumers are willing to take on debt, they must be confident that they can pay it back.
This means that the majority of individuals in the UK are now likely certain that they will keep their jobs, so, because their uncertainty has decreased, they feel more confident in acquiring debt.
This is significant for the UK economy as an increase in borrowing from consumers likely means they are also spending more, so, consumption, which accounts for 66% of aggregate demand is likely on the rise.
Therefore, aggregate demand will increase and the economy will begin to move forwards again, good news for the UK economy.
This is also especially good for the UK government as an increase in aggregate demand means more goods and services will be produced, leading to an increase in VAT revenue for the government.
This is significant because it will make it easier for the government to pay back some of the COVID debt due to their increased revenue.
At the same time, business activity has also increased Motor vehicle traffic is at 92% of last years levels, although some of this traffic may be consumers, further data shows that the number of ships coming in and out of the UK has increased by 10%.
This means business activity has likely seen an overall increase due to the rising confidence levels.
However, there may be an underlying issue if a certain trend persists at current levels.
The ONS also reported that on April 17th 2021, estimated UK dinner reservations for sit down eating were 60% of last years level.
However, this is an overall decrease of 19% since the 12th of April, the date when non-essential shops have reopened.
The reason why this is significant is that, if the downwards trend persists at the current rate, it will mean that the aggregate demand boost from consumer savings will be very short-lived.
Therefore, the economic growth which the nation will achieve as a result of opening non-essential establishments will not be stable and sustainable, if this occurs, it will be unfortunate for the UK economy as it will prolong the time it takes for us to get out of the economic slowdown.
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Research compiled by Jonas Theaker.