The Secret Marketer on the effects of the spending cuts

Winter has arrived and boy what a change it makes to consumer behaviour. I am a prime example. Draped in my new jacket and chunky knitwear, I leave for work and return home in the dark, drink record levels of cappuccinos, reacquaint myself with soup at lunchtime and am dangerously tempted by the warmth of London taxis as opposed to the number 19 bus.

Despite these winter comforts, I am concerned that a chilling depression is in the air as the reality of the Coalition spending cuts begins to bite. Chancellor George Osborne has outlined plans to cut £6.2bn of what he calls “wasteful spending” as he seeks to reduce the budget deficit. He promises less spending on consultancy, cuts to quangos and a civil service recruitment freeze. It is more than three years since the term credit crunch entered the vernacular and it is quite remarkable how long it takes the public sector to begin to get its own house in order.

I suspect the private sector is at least two years into its cost-cutting regime. In fact, many private sector businesses are now coming out the other side and entering a new phase of cautious optimism. Just as the green shoots of recovery appear to be sprouting, it is ironic that the much talked about double dip recession could yet be triggered by the Government itself, with its long overdue and inevitable public sector job cuts. Not quite the economic stimulus we were hoping for.

“I predict a frosty winter ahead as the reality of public sector cuts begins to bite”

With a general election earlier this year, perhaps we should not be at all surprised by this lag affect. The speed of action in the public sector is snail paced because bureaucracy and politics rule. They are only marginally out-paced by big cumbersome corporates where bureaucracy also reigns supreme, though at least these businesses are forced into some kind of delayed action as they remain accountable to the shareholders.

Fastest out of the blocks are small and privately-owned businesses. They tend not to carry the bureaucracy and fat of their corporate or public sector cousins and are governed by business critical issues such as cashflow. Failure to act in real time leads to a somewhat faster form of administration than that usually performed in the public sector. So batten down the hatches everybody… I predict a frosty winter ahead as the reality of public sector cuts begins to bite. Unless, of course, your name is Rooney.


Lucy Handley

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