Credit downgrade should put UK marketers on alert
Sir Martin Sorrell reckons that Moody's decision to strip the UK of its AAA rating is further proof that (for now) we should all be looking to the Next 11 countries and even, still, the BRICS for growth.
Anyone paddling in the lowering tide of developed markets is left increasingly exposed.
We didn't need Moody's to spell any of this out for us, nor does Moody's decision tell us anything about our economy that we didn't already know. GDP has been weaker than might have been expected over the past five years, and the 0.3% contraction in the economy in the fourth quarter of last year pushed through the readjustment.
The downgrade has been anticipated long enough for the stock market to have been trading it through for a while, so Monday's response was hardly Armageddon. On the plus side, too, any fall in the value of the pound means our national debt also falls, in real terms. And any company with a healthy exports line is more competitive now than last week.
The real problem (so far) with Moody's AA+ rating is symbolic; it's a kitemark for caution, giving our already fragile consumer confidence another battering. According to the British Population Survey, February brought further declines in people's optimism about their future financial prospects; only 15% of us reckoned our financial situation would improve any time soon. This figure isn't even as encouraging as it might at first appear: the unemployed formed one of the most optimistic groups, which, considering their starting point, is hardly a barometer of more general hope. Then along came Moody's.
Scouring the papers and news bulletins over the past few days, most of the headlines have wallowed in the Moody's gloom, and the pressure piled on George Osborne's administration added to the uncertainty; anyone poised to book a holiday, buy a car or even go out for dinner was given reasons enough to think again.
For those of us whose incomes have stayed fairly static (but at least haven't declined) through the recession, we have more cause than ever to postpone our spending - not because we can't afford stuff now, but because we're worried that one day we might not be able to. Breaking through that mindset will require ever-smarter marketing thinking and - theme of the year - a greater emphasis on building trust with wary consumers. Marketers' jobs just got harder.
This article was first published on marketingmagazine.co.uk
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