Debenhams on Nicosia’s Ledra Street dropped its prices on some items by 50 per cent yesterday, at a time when most retailers traditionally look to squeeze every last penny out of last-minute Christmas shoppers. Has Christmas reverted from a materialist festival to its original charitable spirit? The answer is more one of pragmatism than generosity.
While such seasonal goodwill will doubtless come as welcome relief to the cash-strapped consumer, it belies a serious problem that we would be remiss to ignore. We cannot afford to live in the manner to which we have been accustomed, and the canny owner of Debenhams is not blind to the problem.
There is very little actual money to spend. Most people borrow heavily to fund lavish Christmas feasts, and the Cypriot household debt-to-income ratio is a staggering and unsustainable 280 per cent.
As austerity measures take hold around Europe, the anger is palpable. We need look no further than the recent protests in Greece, Italy, France or Britain to see the frustration of the people at the length of time it is taking for the economy to recover.
Over the past three years, thousands of employees have been made redundant, through no fault of their own, not been given pay rises and even taken pay cuts.
Jobs have been hard to come by and the few new positions that do exist offer very low wages.
How many times can an employee hear ‘sorry, there is no money available’ before becoming disillusioned?
Even more disheartening is the situation where home owners around the world have lost their properties due to being unable to pay the mortgage.
Boom and bust phenomena have existed for centuries. During a ‘boom’ period, buyers find themselves paying increasingly higher prices until the ‘bust’, at which time the goods and commodities for which they have paid inflated prices may end up as valueless or nearly so.
The world economy nudged towards recovery in 2010, three years since the onset of the global financial crisis, but many expect its growth to remain sluggish in the years to come.
‘Adjustment’ was the buzzword for major economies this year, with the United States struggling to overcome its economic flaws accumulated over the years, Europe fighting two debt crises and emerging economies trying to fend off potential inflation risks.
Given the bumpy recovery process and daunting policy challenges posed to major economies, growth prospects for 2011 are hardly rosy.
Unfortunately, this is not the news that people want to hear, but what can we do?
‘Tighten your belts’, say economists, but in this era of instant gratification, that is something that is easier said than done.
