It's great to go away but so much nicer to come home
It’s great to go away but usually, so much nicer to come home. That’s almost a universally held view but one wonders if Britain became Great because it really was great at doing things really well or because it was precociously doing great things at a quite average level while everyone else was sitting in a tree worshipping the sun. So, if it’s great to come home, to what are we returning?
There is no doubt that our ancestors did a terrific job of establishing an empire and becoming eye-wateringly rich in the process but there is a nagging doubt about our subsequent ability to do anything properly. Perhaps it’s because we have lost our sense of perspective over the years and are wrought with middle class concerns over things that are really quite insignificant rather than focusing on matters which really do matter. The French, for instance, have far less need of a huge do-it-yourself commercial machine because they obsess far less about what Mme. Noir next door will think about their ageing bathroom or tired kitchen. In verité, Mme. Blanc, with the tired kitchen, probably sees it as chic and wilfully chips off a new bit of finish to hasten the distressed look, each time she passes. Also, in verité, she understands that she can whip up a coq au vin in a tired kitchen just as deliciously as Mme. Noir in her hand-made concoction of Sumatran cherrywood. We, on the other hand, seem to think that a £30,000 kitchen says something about us. Perhaps it does and perhaps it isn’t what we’re hoping for.
Part of our problem is that, while we need to understand that, in business, consumers really do recognise value as being more meaningful than price, a significant part of our current economic woes have been brought about by a western obsession with credit and the acquisition of a tidal flow of goods which we really don’t need. No wonder then that, for some, Christmas has become a spending fest fuelled by the fear that others might think we can’t be bothered or, worse still, we can’t afford it! When, I wonder, did we become the 51st state of the USA, more concerned with being valued for what we spend rather than other more valuable attributes?
All this matters because we seem to have followed the world markets into a hole from which common sense has been left behind and the blind pursuit of the status quo leaves us paying far more for basic utilities such as electricity and gas because we’ve started to use more of them. In any other business situation, when you use more of something, you qualify for special recognition as a key customer and are suitably rewarded. Because energy companies buy their supplies on the forward market, with contracts guaranteeing supply in several months time, unusual demand means that we now have to buy additional energy, when we need it most, on the spot market and there, the price can, and does, vary alarmingly. In the height of the cold weather at the beginning of December, demand for gas rose by 25% and wholesale prices rose by 11% overnight. At the same time, electricity costs surged from £55 per megawatt/hr to £71.25, a figure which is 66% higher than two months before. We should, wearily, expect all energy companies to pass on some of these costs to consumers and, at the time of writing, three of the big six energy suppliers have already done so, but why can we not require the energy companies to change the rules by which they buy their supplies instead? Perhaps the world is growing tired of huge corporate profits and the celebration of the fat cat culture with obscene bonuses paid to a minority from the exploitation of the many. Perhaps that sounds like political rhetoric? To me, it is sounding more and more like common sense.
Over the next 15 -20 years, four huge nations will change the face of the world. These BRIC countries, Brazil, Russia, India and China, will between them radically alter not just the population balance but the world markets too, including the demand for supply of utilities, food, services and luxuries. To give some examples: There are already more cars sold in China than in the whole of the USA and, by 2030, China will purchase 50 million cars pa. In Brazil, 32 million people have already moved into the middle/affluent income sectors over the last five years, and that number will double over the next 5 years.
Both these examples illustrate that the way in which we think about things will need to change, along with our understanding of the factors which govern world power. Clearly, a population which, like India, will add 240 million new consumers to the work force by 2030 will expect to be able to use its economic muscle to secure consumables such as food, energy and water commensurate with demand. There are already 2 billion new middle class consumers in the four BRIC countries, spending $6.9 trillion pa. This will rise to $20 trillion by 2020, double the consumption of the USA and the 24 million Indians who will become affluent by 2025, exceeds the entire population of Australia. If it comes to competition for the supply of energy on the spot market, what will such figures suggest will happen unless we think smarter and re-write the rule book on how the essentials of our modern life are bought and sold.
On the brighter side, the British obsession with keeping up with les Jones’es could well become a valuable skill and the basis of a complete new range of services. Without doubt, Mmes. Gomez, Mikailovitch, Patel and Chen, will all see the irresistible desirability of a hand-made Smallbone of Devizes kitchen and we, above every other nation, have perfected the art of justifying the purchase and raising the credit to pay for it.
Now, if we could just secure a decent slice of that $20 trillion market for our new, international personal shopper services, we could afford the investment to keep our roads and rail services going when it snows.