REFUNDS to customers who were mis-sold payment protection insurance are having a similar effect on the UK economy as a tax cut, researchers claim.
About £10 billion has been set aside by banks to cover claims, in what is predicted to become the biggest consumer financial scandal of all time.
But the scandal has a silver lining, with average pay-outs of £2,750 giving people’s cashflows a shot in the arm at a time when their budgets are under huge pressure, due to high living costs, high unemployment and below-inflation pay rises.
The National Institute of Economic and Social Research said that a £10bn PPI payout in 2012 could have the effect of raising GDP by 0.1 per cent.
Simon Kirby, a senior research fellow at the institute, said: “PPI payments are a boost to household finances, broadly the same as having a temporary tax cut.”
