LONDON (7 October 2009) – The British have the gloomiest outlook amongst Europeans
regarding the near-term economy, according to a new survey by AlixPartners, the global
business-advisory firm. The UK has become a stay-at-home TV nation, consuming own-brand
groceries, buying more from discount stores and opting for UK holidays.
As the recession bites into the pocket, only a minority of people who responded to our survey
think that full economic recovery will be before 2012.
The change in spending habits is most pronounced for the “grey pound”, with the over-55s more
pessimistic on the outlook for the UK economy and more likely to have permanently changed
their lifestyle than younger spenders; nearly 20 per cent of over-55s said they made permanent
changes to their lifestyle to deal with economic recession, compared with only 10 per cent of 18-
to 34-year-olds and 11 per cent of 35- to 54-year-olds.
The findings are based on an in-depth economic survey of 1,000 British consumers and a further
4,000 European consumers across Germany, France, Italy and Sweden released today by
AlixPartners.
First to feel the consumer cut-back in the new AlixPartners survey, has been dining out, takeaways and trips to the coffee shop. But the pain has spread wider to a severe curtailment in
shopping for home furnishings, visits to premium stores and purchasing of premium foods.
Stefano Aversa, Co-President of AlixPartners, said: “It looks like Europeans, and the British in
particular, are planning for a ‘bathtub’-shaped recovery. They have put the squeeze on spending
and they show no signs of letting up for at least three years. And, of course, confidence can be
the biggest factor in deciding the length of a recession in the real economy, and a lack of
confidence can often become a self-fulfilling prophecy. As a result, all industries, starting with consumer and retail but not just them, should be thinking now about adjusting their forecasts, purchasing plans and cash-flow models accordingly.”
Pippa Wicks, a Managing Director at AlixPartners, added: “The best retailers have already reexamined their cash management, but with our study showing that 10 per cent of consumers
believe recovery may only come some time after 2014, there is still a large door open for even
healthy companies to find themselves in a stressed situation unless they plan now for a
prolonged period of severe trading conditions.”
The AlixPartners survey found that 10 per cent of those Britons polled think full economic
recovery will be some time after 2014. However, post-recession, UK consumers expect to return
to pre-recession levels of spending and almost the same levels of pre-recession personal debt.
Wicks continued: “Those sectors in particular dependent on the so-called grey pound will have to
make the sharpest of adjustments. This has been one of the fastest-growing consumer categories
thanks to years of prosperity built up on the back of a generation of home-owners with large
amounts of equity.
“The shift to thrift is already underway with less shopping for premium-branded foods and at
premium stores, while trading at discount stores and sales of own branded goods are thriving.
“The key for retailers is planning how long that shift will last, for what category of goods and what age of consumer. British consumers are so accustomed however to borrowings, however, that
once this recession does lift, personal debt and monthly spending is expected to return nearly to
pre-recession levels.”
As David Cameron, leader of the UK opposition, gives his keynote speech to the Conservative
Party today, the AlixPartners survey reveals that five times as many Britons say that the UK
economy is worse off than the world economy than those who say it is better off (53% say it is
worse, 11 per cent say it is better off). The findings also reveal that consumers’ have less faith in the UK government to improve, the UK economy than the Italians’ faith in their government to improve the Italian economy.
About AlixPartners
AlixPartners is a leading global business-advisory firm offering services across four main
disciplines – operational performance improvement and strategic consulting, financial
restructuring and bankruptcy reorganization, litigation consulting and financial advisory services.
The firm's expertise is in helping clients anticipate, evaluate and successfully resolve urgent,
high-impact business challenges in an increasingly complex legal, regulatory and economic
landscape. Drawing on the experience of more than 900 employees from 14 offices across North
America, Europe and Asia, the firm commits small teams of seasoned professionals to deliver
results when it really matters. For more information, visit www.alixpartners.com.