The surge in appetite for saving by the Irish public that manifested in the pandemic is beginning to ebb as the economy reopens, new data from Bank of Ireland indicates.

In May last year, 55pc of people surveyed indicated they saw it as a good time to save, but this has now dropped to 47pc (June 2021).

The re-opening of the economy is contributing to this, as pent up demand begins to get released, according to new data from Bank of Ireland.

“Clearly the roll-out of the vaccination programme and start of the re-opening of the economy has begun to gradually change how people view the world”

By contrast, attitudes to investing have begun to move upwards. In June 2021, 36pc of people surveyed saw it as a good time to invest, the highest since the survey started (it stood at just 23pc in February 2020).

The Savings and Investment Index increased slightly to 104 in Q2 from 103 in Q1, its highest level since 2018, buoyed by the Investment Index while the Savings Index dropped.

Consumer financial confidence

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

“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. We are also finding a growing awareness amongst Irish consumers about low interest rates on savings and increased activity in investing as a result.

“We see this with our customers who are increasingly open to conversations about investing rather than leaving surplus cash on deposit. I believe that this trend will continue given how long this dilemma is likely to be with us.”

Confidence about life in retirement has also continued to strengthen.

In June 2021, 45pc said that they see life in retirement as quite or very easy. This contrasts to 36pc in February 2020. When asked about financial preparedness however, the change is less dramatic. In February 2020, 58pc saw themselves as prepared or somewhat prepared, which rose by just 3pc to 61pc for June 2021.

“We are seeing a persistent trend throughout the pandemic period when it comes to how people feel about retirement,” Quinn explained.  

“On the one hand there’s little improvement in how people view their financial preparedness, and when we look deeper behind this we often find that individuals simply aren’t aware of what it costs to fund retirement. However, 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.”

Family health concerns rise

In Q2 2021, as the economy started to re-open and vaccinations reached more of the population, the Bank of Ireland Savings and Investment Index recorded some significant changes in attitudes and a marked improvement in confidence. Most particularly, when asked about their concerns in light of the pandemic, there was a significant improvement in a number of the responses.

In March 2021, concerns about personal and family health were understandably elevated amongst peoples’ concerns. Back then 71pc of those surveyed indicated they were concerned about their family’s health. By June 2021, as lockdown measures begin to ease, this has dropped back to 54pc. Asked about their personal health, this was cited as a concern for 53pc in March 2021 but by June it had dropped to 39pc. Clearly as the vaccination programme has intensified concerns about family health are being alleviated.

80pc of those surveyed indicated that a further wave of Covid was a concern for them. By this June the number has fallen back to 64pc, suggesting that while the concern is easing, the majority of people continue to be worried about a further wave. With concerns about the Delta variant creating a further wave in August/September, it is clear that mood is still one of concern despite the reach of the vaccination programme.

One in three (34pc) surveyed were concerned about paying every day bills. By June this had dropped to one in four (25pc). Concerns about job security had fallen from 27pc to 22pc and concerns about income reductions from 41pc to 34pc.

“Clearly the roll-out of the vaccination programme and start of the re-opening of the economy has begun to gradually change how people view the world,” Quinn explained.

“While the concerns that have dogged us for over a year remain elevated, Q2’s survey results very clearly show a marked improvement in confidence. Concerns about family health, income and job security and meeting day to day bills have all fallen back significantly.

“There remains a long journey to normalisation, but the Savings & Investment Index findings are very consistent with a resurgent consumer confidence evident across the developed world,” Quinn concluded.

“Assuming that the reopening continues I expect to see a further strengthening in confidence in the coming months, even if concerns about a further wave remain elevated.”

By John Kennedy (john.kennedy3@boi.com)

Published: 16 July 2021

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