Pandora’s budget box contains a Japanese surprise
George Osborne may have underestimated his ability to impact personally on the consciousness of the British people. After his ‘Emergency’ Budget in June, it appears the UK ran for the hills, cowering in fear at the looming axe man, writes Channel 4 News Economics Editor Faisal Islam.
Now, we would expect this of pay-frozen public sector workers fearing for their jobs and we would expect it of the direct suppliers to government: the IT contractors, the social housing builders. But a generalised fall in consumer confidence arising from the austerity budget was not expected.
It is, though, what the evidence is pointing towards. Today two different surveys: one on retail sales by the British Retail Consortium and one on house prices by the Royal Institute of Chartered Surveyors point towards a palpable austerity impact.
As the BRC’s Stephen Robertson told me: “Austerity has landed. Talk of public spending cuts is unsettling customers and they are concentrating on essentials.
Big ticket items like flat screen TVs have had a poor July and ‘taken a real battering’.
Retailers are running a record rate of promotional activity, nearly four pounds in every 10 spent in the UK is now on some sort of meal deal, ‘three-for-two’ or other discount. Even the unstoppable boom in online sales has slowed markedly.
‘Year on year people have seven pound less per week, one in five have no money left at the end of the month after essential bills,” says Robertson.
The housing market too is taking a big hit, with sellers pouring on to the market, and buyers battening down the hatches.
“It’s possible that when the cuts and tax rises actually hit we will get another downturn in consumer confidence” says Bootle.
All of this so far might be manageable. If it continues, and the natural post bubble personal financial conservatism turns into ultra austerity as Britain’s baby boomers start to retire, then go and have a look at Britain’s busiest shopping junction where Oxford Street meets Regent Street in London.
The council has just fitted a diagonal passenger crossing complete with digital countdown so that shoppers know when to cross. It is directly copied from Japan. And it may be a symbol of things to come for the British economy.