Anna Mallia | Wednesday, 24 December 2008

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Christmas blessings

If there was a Christmas when blessings are needed more than ever, it is definitely this Christmas. There is a feeling of mistrust in politicians all over the world with people being in no position to spend money or to spend as much as in previous Christmasses for fear of what is in store for them in the New Year.
It is true that this feeling of uncertainty is felt worldwide for reasons known to the particular people in that particular country. I have just got back from a weekend break in London and although the sterling entices us to spend more, I can say that the shops are feeling the pinch and notwithstanding the early sales and further discounts, the people still do not buy. Harrods used to be flooded with people especially during this festive season but this year, the people did not keep the tradition and Harrods was not busy at all.
Each country has its particular reasons for its people to be careful and budget their Christmas shopping. According to the America’s Research Group/UBS Christmas Survey, Americans say they will spend less and buy fewer gifts this year. Consumers are worried and 44.7% say they feel worse this Christmas than a year ago.
The factors are many. Of those 40.1% of consumers spending less, 27.9% are concerned about the economy, 22.4% are trying to cut down on spending, 15.7% have higher credit card debt, 13.7% are affected by gas and grocery prices, and 10.7% cite job insecurity.
Parents, however, say they will try to create a jolly Christmas for their children in spite of their economic worries. Many will buy less for their spouse so they can spend their normal levels on the children. The children are aware, however. Over a quarter of parents believe that their children feel their financial pressure and are accepting their lower spending levels. Of those consumers buying children’s toys, 44.5% plan to spend less versus only 27.4% who plan to spend more. Almost half of parents say their child has no “must-have” toy.
In Italy the drop in retail sales at Christmas is going to be much worse than what retailers are predicting according to consumer rights group Codacons. National retailers association Confcomercio said that sales will actually inch up by a modest 1.1% this Christmas from €7.9 billion in 2007 to €8 billion, although this would translate into a decline of 1-1.5% when adjusted for inflation. Christmas decorations in Italy saw a drop in their retail sales of 25%.
The decline of only 1% in retail sales would mean that consumers have not felt the effects of the current economic crisis and the increases in prices and utility costs of the past year, something which is highly unlikely, said Codacons chief Carlo Rienzi. Christmas 2008 in Italy will be a very meagre one for retailers with declines in spending of 5% for good, 10% for toys, 20% for gifts and clothes and as much as 25% for home decorations.
Rienzi made it clear that “If Confcommercio wants to protest its members and stimulate consumer spending it is going to have to end its opposition to deregulating the system governing sales, something which even small shopkeepers are now even calling for”.
In Malta I do not know whether sales are regulated and whether one is free to go on sale whenever he wants. But we know for sure that the consumers in Malta this year are being careful more than in other years because they do not know how much the water and electricity bills are going to be when they greet us in the New Year. It is obvious that people on a salary or on a limited budget put their priorities first and save the money to pay their utility bills because these come before the other expenses.
The common feeling here is that Christmas can wait but Enemalta will not wait when it comes to payment of bills, and the trauma of it all is that nobody can budget as to how much money can be put aside for the water and electricity bills because we are still awaiting the first bill with the new inflated tariffs. This has a negative ripple effect on the retailers, in that the people will not spend for fear that they will not have enough money left to pay their bills.
The survey carried out lately by the Chamber for Small and Medium Enterprises shows that shop owners envisage this drop in sales before the festive season. Seven in ten small enterprises fared worse in the second half of this year than in the same period last year and predicting a poorer 2009. Only 9% of businesses experienced a rise in their profits whilst 16% remained the same. More than 60%, the majority employing up to 10 people, have seen a fall in turnover by up to 30%.
The consumers are vigilant more than ever this year, the reason mainly being the high cost of living and the utility tariffs. This vigilance could also be a temporary measure until they receive their first bill with the new tariffs or it could be a perpetual one depending on the size of the bill. People living on a budget cannot extend that budget but they can only change their priorities in order to live on that budget. We should not be blamed for putting the electricity and water bills high on our agenda and for spending less in our shops.
The government knew that this would happen and it needs no surveys to know it. But it seems that ministers’ salaries can make miracles, unlike our own because you do not hear them complaining about the cost of living increase and about other increases in the utility tariffs. We are all ready to make sacrifices for the good of our country but charity begins at home and if the country is in dire straits, they must lead by example. Otherwise their credibility will be at stake!
A Merry Christmas to all of you.

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