As the U.K. budget is announced, JWT London launches the fourth quarter of its Austerity Index report, marking a full year of data tracking the impact of prolonged economic adversity on British consumers and markets. The report reveals that the younger generation are taking matters into their own hands. Meet the Resilients, aged 18-39, who set themselves apart via a strikingly proactive and entrepreneurial approach to their finances, coupled with a comparatively upbeat attitude. Rather than waiting for rescue from any institution, the Resilients are taking their own measures. They are significantly more likely than any other cohort to have found an extra job or taken on more work (35 percent), bought items specifically to “flip” for profit (20 percent) and even started their own business (11 percent). Their resilience is also in evidence when it comes to a startling willingness to make tough decisions and sacrifices: 4 in 10 regularly skip meals to save money, nearly a third (30 percent) are selling items they actually still need or want, and 18 percent have moved to a cheaper city or town.
Despite being among the hardest hit by the austerity agenda—experiencing higher unemployment and negative earnings growth—the Resilients remain pretty positive. Their Austerity Index measure is 22 points below average, indicating that their assessment of austerity’s impact on their lives is less severe than most. Their positive outlook stretches to their appraisal of others, too: They are more forgiving toward brands and institutions, including the government.
Some of this positivity is likely down to youthful optimism, but we suspect that it’s also due to the generation’s sense of connectedness. This is the cohort that has grown up witnessing and harnessing the power of social networks, so they have greater faith in themselves and their communities to wield influence and to drive change. They may well be more in control than most in the face of austerity.
For details on the ongoing study, see austerityindex.com.
British Chancellor George Osborne’s Autumn Statement brought positive news for the U.K. economy. The forecast GDP growth for this year improved to 1.4 percent from 0.6 percent and was revised up for 2014, to 2.4 percent. Osborne claims that austerity is working. JWT’s latest Austerity Index suggests this is not the full picture and that many Britons are not seeing evidence of a recovery where it matters most: in their wallets. In fact, almost half of the 800 respondents we polled for our Q3 study reported having somewhere between nothing and £50 in disposable income each month.
At the same time, some have been able to relax the purse strings a little. The “Efforts to Restrict Spending” Index figure has fallen 81 points since Q2. While this is still small-scale movement in the greater scheme of things, it might suggest that consumer confidence is building in places. This suggests a two-speed recovery, one where some find their lives getting back to normal while others continue to struggle. The JWT Austerity Index shows wide disparities in the impact of austerity, with a difference of 251 points between the highest and lowest income groups.
Our finding is supported by recent analysis from Manchester University’s Centre for Research on Socio-Cultural Change, which shows that London and the Southeast have recovered more rapidly than other regions of the U.K. and that higher earners have become more prosperous since the crash compared with middle and low earners. With the U.K.’s first “social supermarket” for those on welfare opening in Yorkshire, it’s poignant to note that 13 percent of parents said they have been obliged to skip meals so their children can eat.
This polarization is not going unnoticed: In our study, 81 percent agreed that austerity has deepened the social divide in our country. And they want businesses to do their part: 65 percent call for brands to help those most affected by austerity. Contrary to Osborne’s assertion, austerity is not working for everyone, and as systems and institutions fail to address the growing chasm, there is a clear opportunity for businesses to seek ways to even out the disparities in economic fortune.
The Austerity Index survey was conducted using SONAR™, JWT’s proprietary online tool. The JWT Austerity Index is a quarterly study that analyzes the impact of prolonged economic adversity on British consumers and markets. The Q3 report is available to download here. The Q1 report is also available for download, here, as is the Q2 report, here.
Photo Credit: JWT London