The UK economy is close to a "new dawn" fueled by consumer spending, according to the boss of Barclays (BARC.L).
Jes Staley, chief executive of the bank, thinks the successful rollout of COVID-19 vaccines across the UK will lead to a "robust" economic rebound in the second half of 2021, as consumers splurge savings built up during the pandemic.
“I do think that when you and I can go back to a restaurant or go to a shop, consumer spending will recover, I think quite robustly once the pandemic starts to recede," Staley told journalists on Thursday.
UK households have stored up nest eggs worth tens of billions during the pandemic, as spending declined, and incomes have remained steady. Staley said Barclays' deposits went "through the roof" last year, while credit card balances dropped by 25%.
The Barclays boss predicted that consumers would tap these reserves once the economy starts to unlock and the threat of COVID-19 recedes.
Earlier this month the Bank of England said the UK economy was likely to "recover rapidly" in the second half of the year, predicting a boom in consumer spending. Forecasters at the central bank said their main worry was underestimating the size of this expected shopping bonanza.
Staley's comments came on an earnings call for Barclays' 2020 results. The bank reported a 30% drop in annual profits but beat City forecasts. Barclays reinstated its dividend and announced plans for a £700m share buyback scheme.“Once the pandemic is behind people, and people start to regain confidence, they’re going to spend it," he said. "That I think is what we believe will happen and will generate quite a strong economic recovery sometime in the second half of this year."
"In a normal recession, the consumer borrows a little bit more money, spends a little bit more cash to maintain a lifestyle," Staley said. "This time around, the underlying emotion coming out of the pandemic was and is fear. What we saw was, rather than spending a little bit more, consumers massively pulled back and focused on the strength of their personal balance sheet as opposed to a certain income flow."“Barclays will be prepared to welcome the new dawn, if you will, once the pandemic is behind us."