OPINION
Great Britain needs a consumer spending barometer we can all relate to (and afford)
Did you know that The Bank of England uses transactions from coffee chain Pret a Manger to gauge consumer spending and economic activity?
“Pret” as it is commonly referred to, is used as an economic indicator because it has a large number of stores across the UK, with frequent customer traffic. Tracking their transaction data provides BOE with a “real-time snapshot” of consumer spending patterns.
However, its target demographic caters to a predominately professional and office worker demographic. BOE sees increased spending at Pret as an indicator of higher economic activity and business confidence.
But is Pret the best example of an economic indicator for the nation?
While the picture may be improving for personal finances, it’s still a painting by Hieronymus Bosch: deeply disturbing and worrying for many people.
Lewis Shaw, Owner and Mortgage Expert at Shaw Financial Services
Not everyone can afford avocado toast to-go
Isn’t it time the Bank of England ditched the posh nosh and embraced Great Britain’s pocket-friendly bakery chain Greggs instead? Surely, Greggs is more representative of the nation’s spending habits.
While the Bank of England clings to Pret a Manger as a measure of consumer confidence, who among the masses is dashing into Pret every day for a £5-plus lunchtime salad? Or Avo and egg sarnie? These “healthy” fast foods have become luxuries in the cost of living crisis. Don’t we deserve a more honest metric of our realistic consumer spending power?
Look at March’s OND data: credit card spending nudged up just 1%. Transactions at Pret a Manger? Up in nine out of ten locations. Kudos to them, but is that because more companies are calling for mandatory return-to-office measures?
On the other hand, Greggs caters to everyday people, the working class hero, the new parent saving their pennies and the budget-conscious connoisseur of baked goods (which is pretty much all of us thanks to inflation). Plus, there’s the after 4 pm pizza-and-drink deal from £2.85 (a big hit for teens on lean pocket money and junior execs working the midnight oil).*
On the ground, many people I speak to are still struggling due to a combination of high mortgage rates, profiteering utility companies, skyrocketing rents and the highest tax burden since WW2.
Daniel Wiltshire, Actuary & IFA at Wiltshire Wealth
It’s all about survive, not thrive
With inflation at 3.20% at the time of writing, that’s a big bowl of better from the rate of 10% around this time last year. But aren’t we all walking in the dark? Who knows how the world economy could turn if conflicts and wars escalate further in 2024?
“While the picture may be improving for personal finances, it’s still a painting by Hieronymus Bosch: deeply disturbing and worrying for many people,” said Lewis Shaw, owner and mortgage expert at Shaw Financial Services.
Shaw speaking to the Newspage Agency said the reality is that people work forty-hour weeks “just to survive.”
“For most,” he said, “the word thrive has been removed from their vocabulary entirely. Whilst it’s important people have the support they need if they get into difficulty, what’s really needed is a growing economy, higher wages and better job prospects. Anything else is fiddling while Rome burns.”
In response to the FCA’s latest report, Daniel Wiltshire, Actuary & IFA at Wiltshire Wealth said the report felt “very optimistic.”
“On the ground, many people I speak to are still struggling due to a combination of high mortgage rates, profiteering utility companies, skyrocketing rents and the highest tax burden since WW2. It amounts to a complete failure of government policy over the past decade. The FCA are in denial,” said Wiltshire.
In a Guardian article, Peter Tutton, the debt charity StepChange’s head of policy said, “The cost of living crisis has expanded the proportion of the income bands that are vulnerable to falling into debt. We’ve seen more people come to us who have what we call a negative budget. At the other end, we’re seeing people on slightly higher incomes being pulled into debt advice.”
How Greggs’ ‘specials’ could indicate what’s really happening
If devised, The Greggs Consumer Spending Barometer could gauge the nation’s economic sentiment. It could be all-encompassing: from the white van brigade to the uni students, to tradespeople, the money-conscious self-employed, the office worker…
Perhaps the BOE needs to ditch the overpriced avocado toast and posh sandwiches** and use a more representative measure of consumer spending. Greggs and the BOE could even work in cahoots and give us little promotional hints, like the following:
The Sausage Roll Special: Upward sales indicate a reason to celebrate, inflation is going down, companies are hiring and perhaps a promotion could be on the cards.
The Vegan Bake Boost: A surge in vegan alternatives suggests we need to curb our meat grocery bill and divert the savings into ISAs and our pensions to make the most of the latest tax year.
The Festive Feast Fizzle: A post-holiday slump in sales of Christmas bakes signifies a return to reality (and empty wallets). Packed lunches are encouraged to pay down debt. We start to see more meal deals to lift January blues.
While Pret a Manger offers a glimpse into the consumer spending habits of a specific demographic, it fails to capture the broader economic picture. A Greggs Consumer Spending Barometer, which tracks the nation’s favourite budget-friendly bakery chain, could provide a more relatable and realistic reflection of the average Briton’s spending power.
*Greggs | Promotions and offers
** Club Pret – 5 Barista-Made Drinks A Day & 20% Off All Food | Pret A Manger
