Did People Spend More or Less During Lockdown?
Words Vanessa Osinlaru
This week marks the next stage of the government’s plan to ease lockdown measures in the UK. Junior Economist Vanessa Osinlaru reveals just how much of an impact the lockdown had on our economy.
This week marks the next stage of the governments plan to ease lockdown measures in the UK. The harsh restrictions placed upon many lives to slow down the spread of the virus has paralysed business activity. Before Covid-19 the use of online shopping was part of the norm. This allowed many people to continue shopping whilst on lockdown as they normally would. Keeping our drowning economy on it’s feet or tip toes as some would argue. As shops open this week, will the change it brings go down in economic history? Opening shops might be the turning point our economy needs since the pandemic started. As stores open and many excited shoppers get ready to spend, let’s look at how much people really spent during lockdown and whether opening of shops will make a big difference.
Lockdown decreased overall consumers spending but spending increased in certain areas. People spent less during lockdown overall. As of May 12, 2020, combined spending in all categories dropped by almost 30% but grew in certain categories. Online grocery and clothing are the two categories where spending increased significantly. As shops open, the average consumer won’t see a difference. The majority of the shopping people were able to do during lockdown is the same shopping they are able to do now that shops are open. The only small difference is that they are now able to see the items they want to buy physically rather than on a screen.
Unsurprisingly, supermarkets sales rose by 14.3 per cent during April’s lockdown. Brits spent a huge £524 million more on groceries in April this year than they did in April last year. This is partly due to the many people who stockpiled when lockdown was first announced. Articles who advised people to stop over buying when people first started doing so, caused even more people to believe food was running out in stores. This led to millions of people running to the shops to stockpile. Separately, online shopping increased significantly. Spending on eating, drinking and takeaway food online rose by 25 per cent. This figure is higher than the rise of supermarket sells. More people choose the online grocery shopping option than the physical shopping option. Grocery delivery services jumped, by over five-fold with consumers spending a big 558.4 per cent more compared to last year. Most people chose this option, most likely to comply with social distancing rules. Digital content and subscriptions to TV and games streaming services also saw a huge increase in sells whilst people spent lease on airlines, leisure, gaming (sports) and casino during the lockdown.
The economy picking up is heavily dependent on how much people begin to spend in certain areas after lockdown restrictions are fully eased. Did you know that 60% of our economy comes from the consumer? Shops are open and every company will be releasing their best marketing strategies to get you to spend. Overall people spent less during lockdown and this has had a negative effect on our economy. The opening of all shops will definitely cause spending in areas other than clothing and groceries to increase but it is uncertain if this will be the turning point that the world needs to get our economy back on its feet.
Vanessa Osinlaru - Junior Economist