Once again the headlines are full of doom and gloom as a desperate Marks & Spencer discounts heavily in the run up to Christmas… just the time of year they should turning shoppers away for being too busy… OMG!
But those of us who watch the retail sector closely, and whose memories stretch back a year or two, have come to expect this. The slow start to Christmas has become a seasonal news story up with the snow that will bring the country to a halt at the end of January and the sunny day that will crowd the beaches in May.
Radio and TV news will always fill their vox pops with people who are struggling as many who work can’t get to the shops when journalists visit. Away from the anecdotes we find: ‘High street sales rise defies gloomy outlook,’ in today’s Times.
Christmas isn’t what it was. Few wait until Christmas Day to receive the latest gadgets from family, but buy the stuff they want when they want it. That’s why everyone’s so difficult to buy for. We tend to spend the real money on ourselves in the sales afterwards, avoiding Christmas when everything is more usually full price.
Younger people, lucky enough not to remember recession, drive consumer spending. They might be spooked into tightening their belts for a short time, but will soon be tempted into returning to old habits. Anecdotally, I was struck by how quiet Chorlton, the suburb of Manchester where I live which is famed for its bars and restaurants, was a few weeks ago. But last weekend we were turned away from restaurants too busy to take us. People simply can’t keep their belts tightened and are already returning to their old hedonistic ways.
Some are worried that Gordon Brown’s turned reckless gambler, but I’m more worried that they’re falling for economically illiterate Tory propaganda. Government debt is at a record, but it’s more affordable than ever. Just as someone who earns £40k can afford to borrow more than someone who earns £20k, so the country can afford to borrow more today as its income has grown. In 1993, the Tories borrowed £51bn as they belated got to grips with a recession that began two years earlier; allowing for inflation and economic growth that’s equivalent to £110bn today. On current plans, Labour is expected to borrow only £64bn and while that figure is likely to rise a fair bit, the idea that the country’s overly indebted is a myth.
Over in the US where the trouble began, car manufacturers grab headlines as they beg for money, but industrial output is up. A Tory MP complains a weak pound makes holidays expensive, while a former Tory chancellor concedes it will help in the long run as it helps exporters.
New Year is likely, once again, to see the retail sector bounce back and we’ll soon learn how much manufacturers have benefitted from the weak pound. The trick will be to ensure next week’s stimulus package gets the credit… and not let Tories forget that their planned cuts in spending and the unemployment they’d cause, would throw the recovery into reverse.