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Wednesday, March 23, 2011

The recession favours the debtors – mainly young

When I was reviewing David Willetts book (Pinch) I made the point that he had ignored two important factors, amongst many, in coming to his conclusion about the sins of the 50-plus. Low interest rates and inflation are great for those with debt and horrible for those with savings. That roughly equates to meaning that the young do well at the expense of the old.

I hate being able to say “told you so” but I told you so when you look at the latest inflation data for the UK.

Whilst we still have the ridiculously low interest rates of 0.5% the inflation rate has risen to 4.4%. Now that is bad, but if you take into account the real interest rate for the 50 – 64 year olds it is more like 4.6%.

I know I have been going on about Saga’s social networking efforts but they are doing a good job at keeping the issue of the age related rate of inflation in the public domain.

The bottom line for marketers is that older people are at one end getting less income from their investments whilst having to pay an increasing amount of their income to stand still. Dick Stroud

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