A few weeks ago I mentioned the paper written by the chairman of the Treasury Select Committee, in which he argued that government now needs to frame its thinking in the context of an Era of Austerity, having left the Era of Abundance behind us.
The tone of last week's Autumn Statement indicates that George Osborne also recognises this fundamental change.
Against the background of the above, I found it interesting to read last week that:
- In the quarter to June 2011, homeowners paid down £9.1 billion of their mortgages, equivalent to 3.5% of consumers' post tax-income. This is the largest amount repaid in a quarter since Bank of England records began in 1970.
- Since June 2008, nearly £93 billion has been paid off mortgages.
- In late 2006, homeowners were increasing their mortgages (i.e. withdrawing equity from their homes) at a rate equivalent to 5.6% of post-tax income.
The above suggests that amongst homeowners there has been growing awareness of the need for changed attitudes for several years. Last week, I visited the website of Odey Asset Management, and was intrigued by Crispin Odey's 'Current Outlook' which can be accessed by clicking here. Not only does he put into context the current chaos, but also provides another couple of examples of consumers cutting back on expenditure.
Turning to a different aspect of the impact of tough times, you can click here to see a press release put out by ShareSoc in response to Nick Clegg's statements about executive pay. If you agree with ShareSoc's view, there is a link to an E-petition which you can sign.
You might ask why I highlight the above. It is because I regard the issues referred to as providing evidence that the companies which stand to provide attractive investment returns over the next forty years will be very different from those which provided good returns during the last forty years. This is because consumers will have very different needs. LCFR has nailed its colours to the mast by espousing businesses which net export productivity enhancing products and/or services as being one category of future winner.
