Even without double-dip recession, consumer spend will remain cautious, says Clive Black
The British general election served as a sort of fog for us crystal ball merchants.
Prior to the May outcome there was a major imponderable force and so putting together an outline of expectations for the consumer economy was especially challenging. The coalition outcome increased visibility a little, but the emergency budget, if anything, lowered the forecasting cloud cover, making for less visibility again.
That the UK has a debt problem (well the state and households at least) is not in any doubt to our minds. In fact the state publicity machine, with the media in tow, has had a material impact upon consumer perceptions pre and post the June emergency budget.
That the medicine to rebalance the economy will not taste especially pleasant is clearly understood by the majority of folk, we sense, and there is arguably a will for the medicine to now be taken sooner rather than later so that it can start to work.
However, the medicine has side effects and this is where outlook visibility is becoming challenged again as many households take note of the big picture images and inject caution into their expenditure. So, the 'cure' to the economic woes is arguably affecting the patient. Accordingly, the consumer economic indicators are 'plateauing' and, if anything, turning down again, as the British population awaits the detail of the current spending review and the pre-budget report in November.
Most households will emerge relatively unscathed from the emerging domestic political economy, and so probably need not hold back on spending; but uncertainty breeds inertia and caution. While we do not currently foresee the much-discussed double dip for the UK economy (we cannot rule it out), we remain of the view that the next year or so at least will continue to be a 'slog'; an outlook we believe is rightly reflected in the budget expectations of much of the trade.
The UK consumer economy, therefore, is expected to remain in the doldrums to our minds for the next few quarters and the direction of the prevailing winds and so the economy is not expected to become clear until the full extent of government cuts are understood and how the private sector picks up the slack, if at all.
The second half of 2010 could, therefore, be somewhat dull and possibly challenging, especially at the high-ticket end.
Dr Clive Black is head of research at Shore Capital Stockbrokers.
The British general election served as a sort of fog for us crystal ball merchants.
Prior to the May outcome there was a major imponderable force and so putting together an outline of expectations for the consumer economy was especially challenging. The coalition outcome increased visibility a little, but the emergency budget, if anything, lowered the forecasting cloud cover, making for less visibility again.
That the UK has a debt problem (well the state and households at least) is not in any doubt to our minds. In fact the state publicity machine, with the media in tow, has had a material impact upon consumer perceptions pre and post the June emergency budget.
That the medicine to rebalance the economy will not taste especially pleasant is clearly understood by the majority of folk, we sense, and there is arguably a will for the medicine to now be taken sooner rather than later so that it can start to work.
However, the medicine has side effects and this is where outlook visibility is becoming challenged again as many households take note of the big picture images and inject caution into their expenditure. So, the 'cure' to the economic woes is arguably affecting the patient. Accordingly, the consumer economic indicators are 'plateauing' and, if anything, turning down again, as the British population awaits the detail of the current spending review and the pre-budget report in November.
Most households will emerge relatively unscathed from the emerging domestic political economy, and so probably need not hold back on spending; but uncertainty breeds inertia and caution. While we do not currently foresee the much-discussed double dip for the UK economy (we cannot rule it out), we remain of the view that the next year or so at least will continue to be a 'slog'; an outlook we believe is rightly reflected in the budget expectations of much of the trade.
The UK consumer economy, therefore, is expected to remain in the doldrums to our minds for the next few quarters and the direction of the prevailing winds and so the economy is not expected to become clear until the full extent of government cuts are understood and how the private sector picks up the slack, if at all.
The second half of 2010 could, therefore, be somewhat dull and possibly challenging, especially at the high-ticket end.
Dr Clive Black is head of research at Shore Capital Stockbrokers.
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