At the moment the signs are not good, and anxiety about the future means many families are keeping a lock on their deposit accounts. The sums they hold amount to about £200bn, and the chancellor, Jeremy Hunt, could really do with some of it being spent soon – though in a measured and steady fashion, to make sure the central bank does not get spooked and raise interest rates again.
This leaves the economy stuck in a rut, trapped by the flight of people and investment cash after the Brexit vote into having to operate at a significantly lower level.
It is the lack of capacity to generate goods and services following this exodus that exercises the Bank of England. Former Bank official Adam Posen, who now heads the Peterson Institute thinktank in Washington, puts all of the UK’s short-term problems down to Brexit. Without it, the workers and the investment funds would be flowing, which would allow the economy to expand without pushing up inflation. This would allow the Bank to keep interest rates low and the economy humming.
S equals I. That’s an identity. So folks with £200 billion in savings is a problem from investment in the economy?