A colleague said the other day that a client had described him as the grim reaper, because all of his recent press comment has been downcast, and asked if we couldn’t find something positive to say.
As Thumper’s quote from the film Bambi goes: “If you can’t say somethin’ nice, don’t say nothin’ at all.”
I’ve been mulling over this for a few days and, while I really wanted to follow Thumper’s advice, several things I’ve read recently are worrying me.
There’s been much positive comment about the coalition government’s successes, but “Cablegate” may reveal the fragility of the ConDem marriage. With both parties desperate to cling onto power, which they can only do by staying together (for the sake of the marginal seats), the coalition will probably survive this hapless catastrophe.
Even if I’m wrong, the economic impact of another election is unlikely to be positive. Markets don’t like uncertainty and, if the outcome of the 2010 election was uncertain, I can only see that a re-run in 2011 would be even more so.
Consumer credit continues to decline. In October, high street store card credit totalled £297m compared with £426m in the same period in 2009. More seem wary of loading themselves with expensive debt and the restrictions aimed at protecting more vulnerable consumers seem to be working.
While surveys show conflicting information about our spending and saving habits, there’s a theme. Over half say they are cutting back on the amount they spend and that, rather than using credit to fund Christmas spending, they are using savings. That seems prudent.
The VAT increase takes effect in January and an increasingly probable rise in interest rates looms. Public sector cuts will begin to bite and I’m struggling to see how the private sector will be able to take up the employment slack if the rate of output growth slows sharply, as predicted by many economic commentators.
This will all place significant pressure on household incomes. Those who have managed to maintain a good level of savings will have some breathing space if things get tough, but those who’ve reduced the amount they save or diminished their savings to fund Christmas spending may be in a more precarious position.
So I’m sorry that I can’t find much Christmas cheer. Yet, I will count my blessings that we have a well-stocked fridge and a roof over our heads. I plan to kick back and enjoy a few glasses of red and make the most of the break ready to tackle the huge challenges that 2011 will bring.
Alison Beech is business relationship director at Spicerhaart
