UK: From Securonomics to Vibonomics

Burnham swaps “securonomics” for “vibonomics”, betting that stronger confidence can unlock spending before tougher reforms begin. The wager is not without merit: the household saving ratio remains around three percentage points above its 2016-19 average, households accumulated roughly £170bn in excess savings between 2023 and 2025, and, if our forecasts are correct, could add another £150bn by 2027. Given that every one-percentage-point decline in the saving ratio could add around 0.5% of GDP, better vibes may well support consumption and activity for a few quarters. Sustained growth, however, will still depend on reforms that raise productivity, investment, housing and energy supply, and ultimately real wages.