In these times of economic volatility, rising unemployment and fears of a double-dip recession, gauging consumer attitudes towards financial matters has become ever more important to both governments and businesses. In the UK, The Futures Company has been conducting an ongoing research project on the topic since 2008, entitled Feeling the Pinch. And its latest results, discussed at a briefing in London earlier this week, make for pretty depressing reading.
Some topline findings: almost half (43%) of Britons think the economy will get worse in the next year, and a majority (68%) will either have just enough money to make ends meet or be in financial difficulties. And the effects of the downturn go way beyond the financial: 39% agree that they were simply a happier person in general before the recession hit. For Andrew Curry, director at The Futures Company, the consumer mindset has undergone a big shift – and it’s a shift that’s here to stay.
At the moment, the eye of the financial storm is somewhere over the eurozone. There are big economic imbalances within the monetary union, caused by what Nobel-winning economist Paul Krugman has termed the “capital flow bubble from north to south”. Analysis conducted by The Futures Company and Strategy Economics, to be released in full in a a forthcoming Future Perspectives report, suggest several possible ways the crisis will play out. In the best case scenario, governments will work together to redress imbalances within the eurozone bloc; in the worst, several member states will default on their debts, leading to a break-up of the eurozone, and, almost certainly, a gigantic shock to the global economy.
But Curry also noted some small glimmers of hope for the future. Should the rebalancing effort succeed, many EU member states stand to reap big rewards. Poland, with its well-run banks and low public debts, could become a financial powerhouse. German consumers would spend more and save less, unlocking massive demand for goods and services. And, perhaps most surprising of all, male-dominated Italy would benefit from reforms liberalising the economy, leading to an influx of skilled female and young workers. World Bank data show that just 38% of Italian women are currently economically active (and, according to a recent article in the New Yorker, 95% of Italian men have never operated a washing machine).
Unlocking this hitherto untapped potential could even lead, the analysis suggested, to boom years reminiscent of Italy in the 1950s and 1960s. A return to La Dolce Vita, in other words. But this trend is one for the medium to long term. Looking over the next couple of years, economic conditions across the continent seem very bleak indeed.