The big squeeze begins

Just in case you haven’t noticed, Europe is in the process of transferring shed loads of money our of the pockets of its consumers to pay of its astronomical public debts.

A lot of attention has been placed on the Garlic Countries (Greece, Spain, Portugal and Italy) but Germany and now the UK have moved into a five year period of austerity.

What groups of consumers will be most affected – a question that was asked at the time of sub-prime initiated recession and a question we should all be asking ourselves again now.

According to figures released by Markit and YouGov, 44% of households in the UK expect their financial circumstances to get worse over the course of the next year with sentiment falling to a low not seen since the peak of the economic downturn. NB - this research was done prior to the budget.

This is the third successive month when respondents had become more concerned about the fiscal outlook as a direct result of declining in confidence in job security.

The UK’s Institute for Fiscal Studies said the country now faced “the longest and deepest sustained period of cuts to public service spending since the Second World War”.

One thing is certain. There is a group of people who not be affected by these changes - The Charmed Generation. There kids might be affected. Their grandchildren might be affected, and hence they are indirectly affected, but their spending power will remain pretty much untouched. An important group of consumers that marketers cannot afford to ignore. Dick Stroud