Keeping abreast of the state of the economy and, thereby, the prospects for travel is becoming as draining as watching a penalty shoot out.
No sooner have you witnessed a goal or save than there is another bloody penalty.
Last week it was the Greek election, after which euphoria that Greece was not immediately departing the eurozone appeared to last a day. The week before, it was a deal to bail out Spain and its banks.
This week, it looks like being a deal to bail out Cyprus ahead of an EU summit that may see calls to bail out all and sundry bar Germany and France – but who knows about France?
The state of the financial markets provides no clue at all.
In a withering assessment of market sentiment at the weekend, Financial Times columnist John Authers explained the recent gyrations in share prices as the product of “addictive behaviour”:
“Despite hopes that each new hit, in the form of liquidity from central banks, will be the last, they keep clamouring for more . . . Investors’ risk appetite largely depends on whether they are still feeling the high from the latest hit.”
Back in the real world of the UK economy two reports on the state of retailing at the start of this week did not do much for confidence.
One saw the president of the UK insolvency industry’s trade body warn that a fresh batch of retailers is poised to go bust.
The head of the Association of Business Recovery Specialists – for some reason called R3 – reported that, with quarterly rent bills due this week, it is “typically the time when retailers go into administration”.
The association reported the assessment that more than one in four UK retailers is at risk of failing in the next 12 months.
The other saw global management consultancy PwC report wider-than-ever sales on the high street, with retailers cutting prices more aggressively in the past week than at the same time in 2011, 2010 or 2009.
A PwC survey found almost three out of four stores (73%) pushing sales or promotions compared with 40% at the same time in 2009.
The average discount was up too, with stores already on 50%-70%-off summer sales ahead of the first day of summer.
Of course, the lousy weather will be part of the reason and the impact on travel sales could be the opposite.
The Markit household index, out yesterday, showed one third of households had reported a deterioration in their spending power over the past month against 7% reporting an improvement.
The index suggested household debts had increased at the sharpest rate since January and more households reported deteriorating job security than an improvement.
Markit found public sector workers much gloomier about their finances than private – bad news for retailers in areas where local government or hospitals are major employers.
The minutes of the most recent Bank of England (BoE) monetary policy committee (MPC) meeting, released last week, provide a wider take on the situation.
The committee acknowledged UK GDP remains “over 4% lower than at the beginning of 2008 and 0.4% lower than 18 months ago…retail sales had fallen sharply in April…the CIPS/Markit manufacturing index had fallen sharply in May”.
It noted “a reduction in borrowing from banks” and anticipated “the possibility of downgrades to bank credit ratings” which has, indeed, happened.
“Bank lending to businesses had continued to fall, with…an increase in the lending rates facing smaller businesses.”
The committee found: “Basic pay settlements had fallen materially in April, with a higher proportion of across-the-board pay increases clustered around zero than in 2011 or 2010.”
In other words, the pay freeze has returned – and not just in the public sector. The MPC noted: “April was a key month, with around one-quarter of the private sector typically settling then.”
Its assessment ended on the note that “the likelihood of a disorderly outcome [to financial distress and political tension in the euro area] had increased”.
Interestingly, when it came to a vote on whether to engage in yet another round of quantitative easing (or funding the markets’ addiction), BoE governor Mervyn King and his two deputy governors voted opposite ways.
It must be a marginal call whether to throw another £50 billion into the ring this month or next, I suppose. But if even the bank governors can’t agree on the next step, what hope is there for agreement on the euro?
None of this sounds particularly promising in relation to discretionary spending and stronger consumer demand for holidays.
However, there are reasons to be cheerful: not least the weather, the elimination of England from the European Football Championship, the falling oil price and declining inflation.
Let’s hope it buckets down on Wimbledon.
This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.