Stefan Theil
|
Jan 26, 2009 06:06 PM
It's an attitude that would have made World War II–era Britons
proud. The economic state of the world has produced a grim new
frugality in England, the likes of which haven't been seen since the
end of food rationing in 1954. December retail sales showed same-store
declines of 3.3 percent in what the British Retail Consortium said was
the worst shopping season since it began keeping records in 1983. Sales
would have been even more dismal if stores hadn't offered discounts
that were the steepest (some slashed prices by 90 percent) and earliest
in British retail history, according to a survey by
PriceWaterhouseCoopers. In the same month, Britons bought 21 percent
fewer cars than in the corresponding period of 2007, slashed their
purchases of table water and champagne, and cut back purchases of
clothing for the 14th month out of the last 15.
Among the few shops on High Street reporting increases: shoe
menders, pawnbrokers and down-market discounters like the Aldi
no-frills supermarket chain. The closing weeks of 2008 also saw the
bankruptcies or financial collapse of no fewer than 10 big retail
chains, from Woolworths to Zavvi, the former Virgin Megastores.
Applications for allotment gardens—small plots of land where city
dwellers can grow their own food for a small fee—doubled in 2008 in
cities like Warwick. On Amazon's U.K. Web site, bestsellers include
"The Thrift Book," "Food for Free" and "The Penguin Handbook of Keeping
Poultry and Rabbits on Scraps."
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The shift to thrift is of course natural in hard times, as consumers
worry about their jobs and shut their wallets amid the deepening gloom.
This time, however, the clampdown on spending appears to be more than a
sharp but temporary downturn of the economic cycle. In Britain, the
U.S. and other consumer-driven economies, including Spain and Ireland,
it seems to herald a much broader shift: the end of a way of life based
on freewheeling consumption fueled by easy credit and the wealth effect
of ever-rising asset values. Already, once spendthrift Americans have
hiked their personal saving rate from near zero, where it's hovered for
several years, to almost 3 percent in November. Merrill Lynch chief
economist David Rosenberg expects the rate will soon rise to 8 percent
and beyond, levels last seen 20 years ago. Just like overleveraged and
undercapitalized banks, Rosenberg says, private households are now
repairing their own balance sheets by spending less, saving more and
paying off their debt. And just as in the financial industry, this is
beginning to look less and less like a quick fix—and increasingly like
a long-term change of habits.
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