Consumer challenges 2015

Consumer challenges 2015 [ 2.5 mb]

In the past six years there has been a prominent debate in Britain about a living standards crisis. Now, with a recovery having taken hold, this debate has broadened from a focus on falling incomes to a wider conversation about whether the proceeds of growth are being fairly shared.

Scrutiny of trends in living standards has proven vital in difficult economic times. But throughout these debates, attention has focused mostly on the income side of the picture: how falling real wages and cuts to working-age welfare have combined to reduce the amount of money people have available to spend. This focus has many strengths, but one weakness is that it underplays the spending side of the equation. What matters isn’t just how much money people have, but the pressures they face in spending that money. This goes beyond incomes, even adjusted for inflation, into questions of market design.For example, are debt contracts good value, or does interest explode unexpectedly, stretching budgets even thinner? Does advertising inform or mislead, causing money to be wasted? Do contracts hook people into services they’d rather escape, adding unnecessary pressure?

Read James Plunkett's blog on Consumer challenges 2015: Is there a blind spot in our living standards debate?