An English management consultant here, who is also a dutiful son, bought his elderly parents a special gift this Christmas. It was an inexpensive five-day holiday on the Continent valid till the summer of 2009. The present came in the form of a card with a map of Europe with a choice of a dozen holiday destinations prettily picked out in red beribboned bullets—Malaga, Nice, Rome, St Petersburg and so on. But although delighted, the parents, who are retired pensioners, were also worried. They weren’t sure if they could rustle up enough money to pay for extras such as local transport, sight-seeing, restaurants and sundries. The value of the pound sterling has dropped so sharply against the euro that many middle-class British can no longer afford to traipse round old familiar haunts. London stores are full of the French ferrying over to pick up New Year bargains. And after some discussion it was decided that my friend’s poor parents would probably go furthest east, to Istanbul, to be able to use their holiday package.
In all the years I have been visiting England I have rarely seen such a lowering of mood or found British as cash-strapped and counting their pennies. There was a poignant picture in the papers (after the 100-year old high street retailer Woolworths with 800-plus branches and 30,000 employees started selling stock at rock-bottom prices before closing down) of a minister and his his wife scrambling to buy discounted gift wrapping, that summed it all up.
Woolworths going into administration with debts of £385 million has been followed by a series of smaller retail chain closures, cutbacks and sellouts. Marks & Spencer announced it would close two dozen of its food stores, old firms such as Whittard of Chelsea, purveyors of fine teas and coffees, luckily survived with a new buyer, but well-known clothing and children’s wear companies had closed by year’s end. Near-chaotic conditions prevailed when I strayed into Zavvi, one of the country’s largest DVD and music retailers, as bargain-hunters mobbed the place before it downed shutters.
Many of the closures are linked to the demise of the Woolworths behemoth. Plummeting high street credit, though, is but one sign of the general slowdown bordering the onset of recession that has Britain in its grip. It’s not just the big companies that are riddled with debt; the man on the street can’t pay up as cheap credit slacks off. House owners worry that they can’t cope with mortgage payments with rising interest rates in a falling property market. Layoffs are spiralling in any number of sectors. Pension funds invested in the stock market have begun to shrink, so people like my friend’s parents have to eke it out as old age savings dwindle. The poor are the worst off: among the grim stories reported were of the numbers, unable to afford rising heating bills, who are suffering from hypothermia. As a face-saving measure, the government has gone into agony aunt mode. It now funds something called a National Debt Helpline, to help callers find answers to their money crises.
How did it get so bad so quickly? In one word: overspending. Money was everywhere, and available cheaply. From low-interest, long-term housing loans to buy-one-get-one-free supermarket deals, the wages of profligate spending have caught up. I used to watch my friends with a mixture of awe and envy as they replaced last year’s DVD player with a home theatre screen, added glamorous extensions to their homes and took off on far-flung holidays several times a year. It wasn’t because they had spare cash. Just a wallet overload of plastic that promised debt. Now it’s payback time, and it hurts.
Coming home after a couple of weeks, some of the same signs are visible among the newly affluent swathe of Indians. It won’t be long before the wages of overspending catch up here.
