Cash withdrawals in the UK soar as Brits grapple with the rising cost of living
- Brits are using cash as a way to manage their budgets as inflation in the country is expected to peak at over 13% in October.
- Britain's Post Office, which offers banking services as well as mail, handled a record £801 million ($967 million) in personal cash withdrawals in July.
- The company also attributed the jump to more Brits choosing to holiday in the U.K.
Britain's Post Office, which offers banking services as well as mail, handled a record £801 million ($967 million) in personal cash withdrawals in July.
In total, more than £3.3 billion in cash was withdrawn and deposited over the Post Office's counters — the first time the amount has crossed the £3.3 billion threshold in its 360-year history.
Personal cash withdrawals were up almost 8% month on month at £744 in June, and up over 20% from a year ago to £665 million in July.
Staycations and budgeting
The spike in cash use is down to several factors.
"Firstly, more people use cash when they go on staycation, secondly, the Post Office helped to hand out support to energy customers in the form of cash, and thirdly, people are using it as a budgeting method," said Laura Suter, head of finance at AJ Bell.
The Post Office research found that 71% of Brits planning to go on holiday in the U.K. this year intend to take out cash before doing so. Of those who have holidayed in the U.K. in the last five years, almost a third admitted to being caught out by not having cash on them.
In July, the Post Office processed more than 600,000 cash payouts for people eligible for energy bill support from the British government. That came to around £90 million and allowed people to pay energy bills, top up gas and electricity meters or use cash for easier budgeting.
In total, £3.31 billion in cash deposits and withdrawals were processed at the Post Office in July, £100 million higher than in June.
The data comes as the country continues to grapple with rising inflation. The Bank of England expects headline inflation to peak at 13.3% in October and to remain at elevated levels throughout much of 2023.
Is it here to stay?
The latest figures show Britain is "anything but a cashless society," said Martin Kearsley, banking director at the Post Office.
"We're seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget. Whether that's for a staycation in the UK or if it's to help prepared for financial pressures expected in the autumn, cash access in every community is critical."
But the increase in cash withdrawals isn't a long-term trend, according to Suter.
"Cash use will likely fall after the summer, when people are no longer holidaying. But it is likely to continue to be used more by people who are budgeting and want to rely on having physical pots of money to control their spending," she said.
"We're unlikely to see cash use rise to pre-pandemic levels now [that] so many habits have moved permanently online or to digital payment methods."