Around the Campfire: Hugging is back!

In the UK, that is. Prime Minister Boris Johnson said on Monday that from next Monday pubs and restaurants in England will be allowed to re-open for indoor services – museums, theatres, cinemas and children’s indoor play areas will also reopen. Pretty much the same relaxation of the rules will also be true for Scotland. UK deaths from Covid-19 are now at the lowest level since July last year and England’s Covid-19 alert status has gone down from four – the epidemic is in general circulation and transmission is high – to three, which means the virus is still in general circulation but transmission isn’t high. Things are starting to loosen up everywhere, including the US, where at the height of restrictions in late March and early April more than 310 million Americans were under directives ranging from “shelter in place” to “stay at home”.

I’m giving three cheers for what is starting to look like the final days of Covid-19-caused restraints – being able to hug friends and relations again will be for me, and no doubt for many others, as important as being able to dine out or have a beer inside a pub. Johnson has said England is on an “irreversible” path out of its third nationwide lockdown; but he hasn’t ruled out further restrictions if the virus spreads out of control in the future.

What will you do with this unusual freedom? Those fortunate enough to have escaped unemployment are probably flush with cash – the Bank of England said at the end of March that households put more than £17 billion into the bank in February, well above the monthly average of £15 billion since March 2020 and a monthly average of £4.6 billion in 2019.

Economists are now falling over each other to predict a massive ‘bounce-back’ from last year’s biggest economic contraction in 300 years, fuelled by an assumed consumer pent-up wish to get out and spend. I’m not so sure. The people who will spend will mostly be the ones who need to buy essentials, the have-nots or the approximately one-third of people who last year had less than £600 ($847) in savings. People have got into the habit of saving more of their income, putting aside money for a rainy day or for some big-ticket ‘treat’.

I only wish they would look at the interest rates they are getting from their bank deposits – less than 1% on average, about half what the government would like the inflation rate to be, and much less than what it actually is. In a world where inflation is returning, bank deposits daily lose value.

Get out and hug!

Until next week,

Jason