Over the past year, it has been fashionable to decry evidence of economic upturn as “the wrong sort of economic recovery” and one driven by debt-fuelled consumer spending.
But consumer debt has fallen from its peak. Its monthly average growth is well down on the levels in the decade before the financial crisis. And with rises in energy bills and the continuing squeeze on household budgets, it is something of a paradox that there has been a consumer-led recovery at all.
Households this year have had to contend both with pressure on incomes and with severe weather in the critical pre-Christmas days which will have deterred many from venturing out. Evidence of this can be seen in the hefty and at times frantic price-cutting by retailers. Some have been advertising price reductions of 80 per cent to open the shoppers’ purses. Consumer price inflation may have retreated to a four-year low of 2.1 per cent in November, but this is still more than double average annual earnings growth in the three months to October.
So reports of booming Boxing Day sales – tens of thousands of shoppers hitting the high street, with queues forming outside some stores from 3am – need to be treated with caution. This is less an indiscriminate spending spree than consumers looking hard for bargains.
One change, however, is pronounced: the continuing upsurge in online shopping. Some £350 million is said to have been spent online in the UK on Christmas Day alone. While department store giant John Lewis reported pre-Christmas sales up by a respectable 4.2 per cent on a year ago, the group’s online sales were up 31 per cent, highlighting the major role that internet spending is now playing. Yesterday, it reported a strong online start to its clearance sales, with orders up 19 per cent year-on-year on Christmas Day, having seen an increase of 13 per cent year-on-year in the first hour’s trading on Christmas Eve. How markedly the modern household’s festive activity has changed!
This picture, however, may flatter to deceive. From its peak in 2007, consumer spending in real terms has fallen by two per cent, a direct result of real earnings having fallen over the past five years by the second largest amount since 1860. Of late, the pressure has been eased to some extent by falls in the taxes on income, an increase in social benefits and the big rise in numbers in work.
Looking forward, the recent fall in inflation, if sustained, should help household budgets, while further falls in unemployment should deliver further growth in overall consumer spending. Household disposable income should grow by about 1.5 per cent next year. But it may not be until 2015 that we see household spending returning to its long-term average annual rise of two per cent. Until then, frenetic bargain-hunting is a logical and wholly predictable response to the continuing pressures that millions face.
Mrs Brown’s critics got it wrong
Christmas TV shows have changed dramatically, but humour is enduringly popular. The most-watched programme this Christmas was Mrs Brown’s Boys, which attracted 9.4 million viewers. ITV’s drama series Downton Abbey was in eighth place with 7 million.
While “family viewing” patterns have altered, our love of comedy has not. How restrained in retrospect the vintage Morecambe & Wise shows now appear. The highlights can still draw audiences of millions, despite the fact that they were made more than 30 years ago. Little of the humour has dated. Only the conventions of the show’s format and the relative restraint of language and humour gives the age away.
By contrast, Mrs Brown’s Boys has broken through the boundaries of the recorded TV show. Some might argue that its popularity reflects falling standards and ever more coarse humour. But is this any more so than Still Game or Rab C. Nesbitt? In front of a live audience, the producers make a positive feature of the mishaps and errors on stage. Yes, the humour is bawdier and the language often crude. But the freshness of format, the brilliance of characterisation and the sense of unexpected and unscripted diversion have drawn millions of viewers. Some reviewers were sniffy when the show first appeared. They were unconvinced that its unrefined and at times chaotic production values would work. But it has proved, for all its improbability, a smash hit, its innovation connecting directly with audiences in ways that many conventional comedy series failed to do. It has a huge following for the very features that the critics decried. And it needs to be taken no more seriously than Downton Abbey.