Why Britons Are Hoarding Cash Amid Economic Uncertainty And Global Volatility

The Bank of England has reported a substantial increase in the volume of banknotes in circulation as UK households resort to hoarding cash during times of heightened economic and global instability. Data indicates this rising trend, which began in 2022, reflects concerns about unpredictable events such as cyber-attacks, inflation, and fears of banking outages.

Victoria Cleland, the Bank’s chief cashier, highlighted this phenomenon during the recent Cash in the UK conference. She explained that, much like during the Covid pandemic and the cost-of-living crisis, Britons are turning to physical cash as a contingency measure. Some of this behaviour stems from the global uncertainty caused by the war in Ukraine, ongoing inflation pressures, cyber breaches, and recent trade wars, including those initiated by former US President Donald Trump.

Despite the significant drop in cash transactions—down to just 12 percent of all payments in 2023—cash in circulation has surged by 23 percent since pre-pandemic levels. Interestingly, the preference for physical currency appears twofold: a safeguard against potential banking outages, as seen during the power blackout in Spain and Portugal earlier this year, and as a budgeting tool to help families manage everyday expenses amidst soaring inflation.

High Street banks and building societies, including Nationwide, reported a noticeable rise in demand for cash. Nationwide revealed a 10 percent increase in ATM withdrawals in 2024 compared to the prior year. Cleland noted that many households experiencing financial challenges are using cash to control their spending, showcasing its enduring relevance despite the dominance of electronic payments.

Renewed scepticism towards digital transactions may also be driving this shift. Recent cyber-attacks on organisations, along with technical outages, have further diminished trust in card-based or online payment systems. Cleland commented that during crises, households often prefer to physically hold onto cash, ensuring they have access to funds even during periods when networks may fail.

The decline in cash use that began in 2014 reversed slightly from 2022 as inflation spiked. Campaigners are now pressing the government to introduce legislation ensuring retailers accept cash, citing concerns over accessibility for those who rely on it. Cleland summarised that while consumers may not use cash as frequently, they want the reassurance that it remains an available option, particularly as challenges to the economic landscape persist.