nickshanagher

When disruption to the newspaper market caused by the closure of the News of the World was making headlines last week, a few managing directors were saying to me that we should all be worrying about the financial crisis gripping the Eurozone. They may have a point but they are wrong if they think that the closure of the NotW is not an important moment for local shops. Newspapers are a major footfall driver for independent shops. Whether it is customers that you deliver to or ones who come to your shop, you need to hold on to them. It is obvious why retaining customers is so important. But shopkeepers also need to note that most are likely to have less money to spend that they did a year ago. The Asda income tracker shows the average family has £9 a week less money to spend than it did a year ago.  What is causing this? Higher taxes and higher energy prices. How long will disposable incomes fall? For at least another year, most analysts say. "The outlook for the UK remains po...

Local retailers will be thinking hard about the impact of the government spending review announced last week. The first thing to note is that the government is not cutting spending at all. In fact, as economist Roger Martin-Fagg points out, spending will continue to increase by 5 per cent over the next four years. What may happen, if the economy grows, is that the proportion of the economy that is accounted for by government spending will contract from 47 per cent today to a level of 40 per cent at the same time. For the purpose of comparison, spending was at 37 per cent in 1997 when Labour came to power. According to Mr Martin-Fagg, the current plans will cut spending in around 6 million houses with mortgages by £500 a year over the next four years. On the other hand, if the government did not constrain spending, interest rates would need to rise by 1.5 per cent and that would cost the same householders £900 a year – nearly twice as much. On this simple measure, the spending...