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How are we spending our money? How are we spending our money?
(1 day later)
Analysis By Ian Pollock Personal finance reporter, BBC News 200 shops are closing in the UK every weekAnalysis By Ian Pollock Personal finance reporter, BBC News 200 shops are closing in the UK every week
The UK economy went very firmly from boom to bust in just 18 months.The UK economy went very firmly from boom to bust in just 18 months.
The sunny economic uplands of August 2007 became, by the end of last year, swathed in gloom.The sunny economic uplands of August 2007 became, by the end of last year, swathed in gloom.
Nowhere has that downturn been more visible than on our High Streets.Nowhere has that downturn been more visible than on our High Streets.
Thousands of shops have closed down, including some of the best known names such as Woolworths.Thousands of shops have closed down, including some of the best known names such as Woolworths.
One in 10 shops is now empty, according to the credit scoring company Experian.One in 10 shops is now empty, according to the credit scoring company Experian.
And along with this has come a sharp change in our shopping habits.And along with this has come a sharp change in our shopping habits.
No growthNo growth
According to the latest data from the Office for National Statistics (ONS), the volume of retail sales hardly grew at all in the 12 months to February, rising by just 0.4%.According to the latest data from the Office for National Statistics (ONS), the volume of retail sales hardly grew at all in the 12 months to February, rising by just 0.4%.
At the peak of the housing market expansion, housing-market related expenditure was the dominant factor driving retail sales activity ONSAt the peak of the housing market expansion, housing-market related expenditure was the dominant factor driving retail sales activity ONS
That was the slowest annual growth rate for 14 years.That was the slowest annual growth rate for 14 years.
And the value of those sales has actually dropped, by 0.4%, to put the nation's collective weekly shopping bill at £4.8bn.And the value of those sales has actually dropped, by 0.4%, to put the nation's collective weekly shopping bill at £4.8bn.
February was, in fact, the second time in three months that the value of sales had been lower than in the corresponding month the year before.February was, in fact, the second time in three months that the value of sales had been lower than in the corresponding month the year before.
December 2008 - dominated by the annual splurge of Christmas shopping - was down by 0.7% on December 2007.December 2008 - dominated by the annual splurge of Christmas shopping - was down by 0.7% on December 2007.
Just cast your mind back three months to the middle of December and recall all those "for sale" signs that were up in the shop windows before Christmas, not just afterwards as usual.Just cast your mind back three months to the middle of December and recall all those "for sale" signs that were up in the shop windows before Christmas, not just afterwards as usual.
Just to underline the fact that we are in the middle of a sea-change in our spending habits, that was the first time on record that the value of one December's sales has been lower than a preceding one.Just to underline the fact that we are in the middle of a sea-change in our spending habits, that was the first time on record that the value of one December's sales has been lower than a preceding one.
For once, the ritual whinging by retailers that they faced a difficult Christmas turned out to be true.For once, the ritual whinging by retailers that they faced a difficult Christmas turned out to be true.
Property marketProperty market
You do not need to be an economist or a statistician to guess that people have been spending less freely, and that shops have been cutting prices to bring customers through the doors.You do not need to be an economist or a statistician to guess that people have been spending less freely, and that shops have been cutting prices to bring customers through the doors.
Zavvi was one of the many chains of shops to go bust in recent monthsZavvi was one of the many chains of shops to go bust in recent months
The ONS has researched what has been going on.The ONS has researched what has been going on.
Its Economic & Labour Market Review (published on 17 March) makes the point that the credit crunch and the slump in the property market pulled the rung from underneath a large chunk of our household spending last year. Its Economic & Labour Market Review (published on 17 March) makes the point that the credit crunch and the slump in the property market pulled the rug from underneath a large chunk of our household spending last year.
"At the peak of the housing market expansion, housing-market related expenditure was the dominant factor driving retail sales activity," the ONS said."At the peak of the housing market expansion, housing-market related expenditure was the dominant factor driving retail sales activity," the ONS said.
The feel-good factor associated (by some) with rising house prices disappeared.The feel-good factor associated (by some) with rising house prices disappeared.
And so did the opportunity for home owners to cash in on the value of their homes, by taking on larger mortgages and spending the cash in shops, stores and supermarkets.And so did the opportunity for home owners to cash in on the value of their homes, by taking on larger mortgages and spending the cash in shops, stores and supermarkets.
The result was that the value of sales from our non-food stores started falling as last year went on, and was down a whopping 5.8% February to February.The result was that the value of sales from our non-food stores started falling as last year went on, and was down a whopping 5.8% February to February.
And as people moved less, and spent less on their homes, the sales value of all types of household goods in that time dropped by an enormous 9.2%.And as people moved less, and spent less on their homes, the sales value of all types of household goods in that time dropped by an enormous 9.2%.
Small wonder that furniture stores such as Land of Leather and MFI have gone under.Small wonder that furniture stores such as Land of Leather and MFI have gone under.
Online shoppingOnline shopping
The value of food sales held up, partly because of higher food prices.The value of food sales held up, partly because of higher food prices.
As households face declining wealth in the current economic climate, they have reacted by cutting down on credit-driven discretionary spending ONSAs households face declining wealth in the current economic climate, they have reacted by cutting down on credit-driven discretionary spending ONS
As the ONS said, "the positive growth of food sales is partly a reflection of most food items being necessities".As the ONS said, "the positive growth of food sales is partly a reflection of most food items being necessities".
Alongside all his has been the continued growth of internet shopping.Alongside all his has been the continued growth of internet shopping.
In the last three months of last year, this helped the category called "non-store retailing and repair" to be the second biggest growth sector among all types of retailers.In the last three months of last year, this helped the category called "non-store retailing and repair" to be the second biggest growth sector among all types of retailers.
"This perhaps suggests that consumers, in search of ways to maximise the utility of their limited resources, may be turning away from traditional stores to online retailers in search of bargains," said the ONS."This perhaps suggests that consumers, in search of ways to maximise the utility of their limited resources, may be turning away from traditional stores to online retailers in search of bargains," said the ONS.
The ONS points out that new car sales, always very sensitive to consumer well-being and the availability of credit, have collapsed too.The ONS points out that new car sales, always very sensitive to consumer well-being and the availability of credit, have collapsed too.
Though not part of the official retail statistics, the showrooms are very much part of the retail scene.Though not part of the official retail statistics, the showrooms are very much part of the retail scene.
"As households face declining wealth in the current economic climate, they have reacted by cutting down on credit-driven discretionary spending," the ONS said."As households face declining wealth in the current economic climate, they have reacted by cutting down on credit-driven discretionary spending," the ONS said.
All these big changes were taking place towards the end of a year in which, overall, average earnings in the UK still grew steadily, up by 3.6% in the year to November.All these big changes were taking place towards the end of a year in which, overall, average earnings in the UK still grew steadily, up by 3.6% in the year to November.
So what will happen if job losses, wage freezes, and even wage cuts, become even more common than they were a few months ago?So what will happen if job losses, wage freezes, and even wage cuts, become even more common than they were a few months ago?
The chances are that this year our spending habits, and the look of our High Streets, will go though even more upheaval than they have already.The chances are that this year our spending habits, and the look of our High Streets, will go though even more upheaval than they have already.