In any crisis, the question of whether to be economical with money or double down spending is pertinent. This dilemma is true for governments, and also at a personal level.
Saving sounds like the wiser option on paper. It is tough in practice. During the Coronavirus Pandemic, saving has proven to be an uphill battle for UK families. Unfortunately, this crisis does not have a stable timeline. Even with vaccines, the economic effects of the Pandemic will linger for a while.
Spending is attractive not only from the consumer but also from the investment perspective. The recent Gamestop phenomenon has shown that even regular people can have a significant footprint when they invest in stocks. Regulatory responses to such phenomena will be fascinating to watch. Regardless, the writing is on the wall. With digitization and online trading platforms, stock markets are getting more democratized.
Saving Is Difficult for Many
It would seem easy to save money during lockdowns. However, many people are spending more than ever. This pandemic has brought unique challenges. Indeed, saving came naturally for people who were able to cut on the finer things of life; lesser vacations, eating out, and luxury spending.
There is a large segment of the population that never had those options. Their fixed costs like childcare, remote learning, food, and other bills are not any cheaper. In places with supply chain disruptions, the cost of food is slightly higher. More people in developed countries have to rely on social welfare programs to get by.
Saving is impossible when the source of income evaporates. Employment numbers since the pandemic began are a worry. There has been considerable improvement in the last few months. Regardless, there are many people still out of work. Similarly, employees in certain service industries have seen a drastic decline in income.
In general, saving is not an easy option during a pandemic. Comfortable families can make this choice. The reality is that too many people live paycheck to paycheck and can only plan for their present situation.
The self-employed and low-income workers bore the brunt of the pandemic. Affluent families had a different scenario. Some were even able to save much more than they could normally. The income inequality gap actually widened during this pandemic. Those at the bottom of the financial ladder bore the brunt of this crisis worst. The saving dynamics had everything to do with people’s situations before the crisis hit.
COVID-19 Complicates an Already Dicey Brexit Situation
The UK finally left the European Union on February 1, 2021. This date is significant for many reasons. Chief among them is that it has been more than five years since the actual referendum. The economic consequences of Brexit are more pertinent.
Covid-19 gave UK businesses enough challenges last year. This reality compounds the problem for some. Many small to medium-sized businesses in Wales may not be ready for Brexit after struggling with Covid.
Brexit brings a new landscape to businesses in the region. Businesses have to operate under a new system, with new responsibilities and regulations that came into force on January 1.
Businesses that rely on exports and imports will need to make the biggest adjustment. That said, all kinds of businesses will need to prepare. Any supply chain disruptions or regulatory changes will affect businesses directly.
Accordingly, businesses will need to understand details like customs declarations as these will be essential for accounting for VAT. Similarly, businesses that employ EU and non-UK workers will need to adjust to the new landscape.
Therefore, businesses will need to adjust quickly. For those that require capital, they have to assess their options fast. The UK government has a website focused on giving business transition advice and information.
The Big Picture; Making the Most of a Difficult Situation
Issuing generic advice on spending or saving is not easy. The specific context of individuals and businesses is vital. Some will decide to cut their losses, while others will opt to keep going. Some businesses have thrived during this pandemic. Others have taken a beating. The hospitality industry, for instance, had a significant slowdown last year.
Brexit also adds unique challenges for British businesses. The twin effect of these issues means that the next few months will be crucial for many businesses. News of vaccine developments is welcome. However, this is a gradual process, and the world will have to deal with the crisis for months.
In summary, the goal is to make the best decisions possible. Circumstances are unique to each person. The ability to navigate such a historic time might be decisive during future crises.