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Wednesday, December 16, 2009

The £178,000,000,000 problem

Let’s say a friend earns £498 per week, day, hour depending on what business they you work in but they spend £676 in the same period. Now let’s say they have been spending more than they earn for sometime and expect to do so for years to come.

In fact they expect the difference between what they spend and their earnings will increase.

Put on your marketer’s hat. Do you think this is a credible situation or do you expect that reality will soon catch up and they will have to make some substantial cut-backs in their lifestyle. You have friends living in Greece and Ireland who have been equally crazy with their financial affairs and the news from them is not good.

OK, multiply these numbers by a billion and you have the state of affairs in UK plc. I know there is a big difference between household budgets and national fiscal affairs but there is also a lot in common. The elephant in the room for 2010 and years to come is a £178 billion deficit.

Martin Wolf (The FT’s lead economic correspondent) opened his article in today’s paper
The UK is poorer than it thought it was. This is the most important fact about the crisis. The struggle over the distribution of the losses is going to be brutal
Does the UK’s financial crisis mean that commerce, as we have known it will come to an end - of course not? Will their still be lots of opportunities for innovative marketing ideas – of course there will be. But, and a thousand times but, the bland assumptions we have been able to make during the unreal times of the past decade will not keep working.

The rock certain prediction about 2010 is that marketers are going to have to work a lot harder for their wages. That applies equally to those targeting pensioners or school kids.

There is one group of consumers who are living a charmed life, for now. The Office for National Statistics has just released data showing that public sector workers are still receiving pay rises nearly three times higher than their counterparts in the private sector. Happy Xmas. Dick Stroud

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