Understanding The Recession

Understanding the recession and laughing in its face Presentation to the Association of Charity Shops Joe Saxton July 2009 Telephone: (020) 7426 8888 e-mail: joe.saxton@nfpsynergy.net Web: www.nfpsynergy.net

The economics of the recession

Hard times ahead??? Durex profits surged 46% first half of this financial year £32.5 million made by SLL Source: London Paper, 26/11/08

Real GDP growth, quarter on quarter Data up to Q1 2009 2.00% 1.60% 1.20% 0.80% 0.40% 0.00% -0.40% -0.80% -1.20% -1.60% -2.00% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 2002 21240: Economic Snapshot

Inflation – The three main measures Data up to May 2009 12% CPI (Consumer Price Index) Headline inflation (RPI) 10% Underlying inflation (RPIX) 8% 6% 4% 2% 0% -2% 1989 1990 1992 1993 1994 1995 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 1991 1996 2000 2009 21238: Economic Snapshot

Interest rate, at end of month Data up to May 2009 16% Bank of England base rate Real interest rate (base rate minus RPI inflation) 14% 12% 10% 8% 6% 4% 2% 0% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 21239: Economic Snapshot

Earnings growth Nominal seasonally adjusted 3-month averages (including bonuses) vs. RPI inflation Data to April 2009 10% Nominal earnings growth 9% Real earnings growth 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% 1991 1994 1995 1997 1998 2001 2002 2005 2006 2008 2009 1992 1993 1996 1999 2000 2003 2004 2007 21241: Economic Snapshot

Unemployment Among all aged 16+, 3-month averages, seasonally adjusted Data to April 2009 12% Unemployment rate (left hand axis) 3200 Number unemployed, 000s (right hand axis) 2800 10% 2400 8% 2000 6% 1600 1200 4% 800 2% 400 0% 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 1989 2007 2009 21242: Economic Snapshot

UK house prices – Year-on-year % growth Data to May 2009. Halifax data from 1984 within chart. 30% Halifax Nationwide 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% May-92 May-95 May-96 May-97 May-00 May-01 May-02 May-06 May-93 May-94 May-98 May-99 May-03 May-04 May-05 May-07 May-08 May-09 19281: Economic Snapshot

FTSE 100 share index Figures shown are at the close of market trading every Monday. Data from 1984 is included within the datasheet. 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 Jun-89 Jun-90 Jun-92 Jun-93 Jun-94 Jun-95 Jun-97 Jun-98 Jun-99 Jun-00 Jun-03 Jun-04 Jun-05 Jun-06 Jun-08 Jun-09 Jun-91 Jun-96 Jun-01 Jun-02 Jun-07 4933: Economic Snapshot

The value of Sterling Value of £1 in terms of Euros and US Dollars. Monthly averages. Data to 16th June. 2.10 Euros 2.00 Dollars 1.90 1.80 1.70 1.60 1.50 1.40 1.30 1.20 1.10 1.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 22228: Economic Snapshot

The value of retail sales Year on year % change in sales 10% Total sales Like-for-like sales 8% 6% 4% 2% 0% -2% -4% Jul-06 Nov-06 Jul-07 Nov-07 Nov-08 Jul-08 Jan-06 Jan-08 May-06 Jan-07 May-07 May-08 Jan-09 May-09 Sep-06 Mar-08 Sep-08 Mar-06 Mar-07 Sep-07 Mar-09 19274: Economic Snapshot

How do people feel in a recession?

Consumer confidence index – Monthly Data up to May 2009 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% 1990 1994 1995 1996 2000 2001 2002 2003 2007 2008 2009 1991 1992 1993 1997 1998 1999 2004 2005 2006 21647: Economic Snapshot

Optimism about household finances Data to May 2009 35% Balance 30% 25% 20% 15% 10% 5% Past 12 months Next 12 months 0% -5% -10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 19280: Economic Snapshot

Optimism about the UK economy Data to May 2009 60% Balance Past 12 months Next 12 months 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 22234: Economic Snapshot

Confidence about employment and major purchases Data to May 2009 40% Balance Major purchases Employment 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% 2000 2001 2002 2003 2005 2006 2007 2008 2009 2004 22235: Economic Snapshot

Areas people are economising on % of shoppers who have economised on the following activities in the last 6 months “Have you economised in the last 6 months on any of the following?…” Eating out Clothes shopping Travelling by car Food shopping Holidays Going out to the theatre Treating yourself Home entertainment Cutting back on savings Home and garden improvements Air travel Gym membership Charitable donations 0% 5% 10% 15% 20% 25% 30% Source: Institute of Grocery Distribution (IGD)/nVision Base: 1,002 respondents aged 18+, GB, 2008 21724:

Understanding The Recession

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