The ‘golden era’ or the ‘roaring twenties’ is an unparalleled time in history, infamous for its dramatic uplift in consumer spending. The hedonistic pursuit of an outrageously lavish lifestyle was not merely a passing trend but rather a mass reaction to a period of societal oppression. Though there have been countless historical studies on this period, popular opinion denotes that the mass enforcement of prohibition created a coiled-spring effect. The economic and social hardship felt by many in the aftermath of the First World War in terms of loss, prohibition and rationing led many to pursue a lifestyle of frivolous spending simply because they now could. This hedonistic pursuit was embodied by a growing prosperity in the Western world, and sustained by forcibly deferred spending, a boom in construction and rapid expansion in the supply and demand of consumer goods.
A century later and history seems to be repeating itself.
The long-lasting effects of the coronavirus pandemic have created a period of prohibition, social constraint and loss; a climate which is not entirely dissimilar from the one experienced in the years before the ‘golden age’. Yet, according to some economists, this second-coming of a golden era has the potential to far out-scale the first. Whilst the original era mainly impacted the Western world, the wide-ranging impact of the pandemic has created conditions which are conducive to a global financial bounce back.
Chancellor of the Treasury, Rishi Sunak, has spoken of the impending uplift in consumer spending and made provision for this in the publication of various government schemes to support and enhance the economic boom. Many sources have also reported a possible £140 billion balance surplus withheld by both individuals and businesses. This is only one possible source of domestic capital that is likely to be released once the floodgates on consumer spending are opened by the easing of social restrictions in the next few months. A recent UK purchasing managers’ index (PMI) survey revealed that UK manufacturing grew at the fastest rate in approximately 27 years in April 2021.
Other sectors of the economy are also experiencing an uptake in demand with mortgage lending also spiking by £11.8bn in March, as households sought to take advantage of the stamp duty holiday on the first £500,000 of a purchase before the policy is withdrawn in June 2021. The promising nature of the already established market demand for the hospitality industry has seen a majority of economists upgrade their projections for the UK’s GDP growth from 5% cent to 7%. With Chief Financial Officers (CFOs) adopting an extremely positive outlook in this year’s CFO survey, consumers and various other manufacturing and services are following suit as market sentiment continues to surge.