Now is the usual time for ruminations about the coming year, so I looked back at the downbeat column I wrote last December. The prospects for next year, if anything, look somewhat worse.
Clearly the hoped-for upturn in consumer spending, however slight it might have been, isn’t going to happen. Food price inflation will keep the pressure on millions of family budgets and the near-certainty of further increases in indirect taxes will tighten the squeeze.
The government could help by swinging the axe more vigorously on its own current spending but few ministers - Michael Gove excepted - seem to have the stomach for the fight that would follow. As usual, it’s the Treasury against the rest.
For the grocery sector, there are few surprises. As I predicted four years ago, the priority for lower income families and many pensioners will be to go on getting the biggest bang for their buck, so exhortations to eat more healthily and all the paraphernalia about labelling will pass them by. Fiddling with minimum pricing for alcohol will be also be a costly waste of time. The Treasury needs more, not less, from drinkers.
“Food price inflation will keep the pressure on family budgets”
The implications for those town centres on the cusp of decline, and even some who are still holding their own, are also clear. In a penny-pinching age, the advantage very obviously lies with online and value retailers, as their recent results demonstrate. A retailer with a strong reputation for value should therefore think twice before moving its offer upmarket. Only M&S, with its impregnable reputation for quality and innovation, can hold its own in this territory.
A freeze on business rates might keep some shops in business a bit longer, but it won’t stop the continuing decline of many high streets. Nor will yet another sally against “red tape”. To be effective, deregulation requires someone to take a risk. Too many regulations are retained just in case something undesirable happens if they are scrapped.
So I end on the same bleak note as last year. Don’t look to governments for any kind of fix. As Shakespeare put it: “On such a full sea are we now afloat, and we must take the current where it serves, or lose our ventures.”
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