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British High Street "crisis" due to debt not brexit!

lse:tsco

#1

"Clearly, these high levels of spending have not been driven by rising wages. Instead, they’ve been driven by debt. 2017 was the first year since 1988 – the height of the Lawson boom – when consumers spent more than they earned. Levels of unsecured consumer debt – debt not backed up by collateral, like credit card borrowing – are now the highest they have ever been.

These rising debt levels follow the pre-crisis explosion in household debt, which peaked at 148 per cent of households’ disposable incomes in 2008. Since then, low wage growth has made many consumers unable to pay off the debts they accrued before 2008, whilst low interest rates have encouraged them to take on even more. Today, household debt stands at around 133 per cent households’ disposable incomes – roughly the same level as it was in 2005, in the midst of the pre-crisis bubble."


#2

It’s not debt … it’s borrowing against our future? :thinking:
But, If people can’t afford the goods that they produce (low wages) then the factories will close (unemployment)
You are right btw … it is just a giant bubble
The gap between the super rich has never been so wide.
Some say cheap labour has benefited business…
My “opinion” fwiw is that it has only benefited the rich.

The high street crisis is not new and I’ve witnessed the slow decay over 20/30 years
From the Saturday markets to local butcher, veg or even fashion shop.
Everything is now in Tesco or Asda.
Go into any retail park in the UK and you’ll find the same brands in every town … so why even go there?
It’s all online anyway !!


#3

I think it goes a lot deeper than this article, don’t forget in the late 90’s / 00’s the mad rush to liquidate all free-hold assets & turn them into leaseholds, a classic case in hand of chasing share-holder value at all costs going spectacularly wrong. Also many retailers being bought by leveraged buy-outs & then being bought back to the markets with massive debts (Debenhams) Boots is yet to return.

Many people quote Amazon, most of my stuff I buy from ebay. Trainers from 14 GBP, 80 GBP+ in High Street, retail outlets (not pink I like the silvers & all green) https://www.ebay.co.uk/itm/2019-Men-Women-Sneakers-Sports-Gym-Fitness-Casual-Trainers-Casual-Running-Shoes/392210802505?var=661147067523. In many cases it is cheaper to buy online than go to the shop (included delivery)

But don´t forget that the online business has broken Tesco & other retailers barriers to entry plus fashions change. Who buys CD´s & DVD´s any more? Books bought online.


#4

Just to highlight what you are saying.

Wal-Mart, has held food drives for their employees.

In other words: One of the richest families in the most wealthy country to ever exists asks for charity from their customers instead of giving raises to their employees.


#5

I know its not the simple answer … to pay the workers more so they can spend more?
I’m not advocating high wages btw and it is a question of balance. It could spiral up, but at the moment I don’t believe we have that balance and we’ve been in a downward spiral.
When almost every day you hear about CEOs and directors awarding themselves higher wages and bonuses etc, you know it’s not right?
“The rich getting richer” !!


#6

It is rarely that I agree with you Fynne, but is must be true that rock-bottom pay is counter-productive in a capitalist system for the simple reason that money makes the world go round. Pay a person a very low wage and then their discretionary spend is similarly small. Also as we have seen with Brexit, economic exclusion can have destabilising impacts.

We might also consider the disparity in pay. When company bosses can earn more in three days than some of their employees earn in a year then something must be wrong. The remuneration package that the Persimmon boss was on was nothing less than grotesque. Clearly someone on an income of £15,000 per annum benefits in terms of quality of life for every extra £1,000 of income than her boss on £1.5 million would benefit from every extra £100,000 of income. At these very high levels of pay the money becomes pretty meaningless as you don’t really need it.

One other very good reason to pay higher wages is that this would reduce the demand for benefits which are, arguably a state subsidy for low paying employers.

Cheers,

Frog in a tree