Shop til you drop?

The government would like you to go shopping. They would prefer it if you flashed the plastic, as they want you to go borrowing as well.

I have a more modest suggestion. If you think at some point in the next year or two you cannot resist the temptation of an import of two, go and buy it today. If you cannot cure yourself of the craving for continental wine, have one last fling. If the curves of European furniture are keeping you awake at nights, go and treat yourself this weekend. If you still do not have enough amazing electrical and electronic gismos and TVs from Japan, this might be your last chance to afford one.

I did some research for this blog during my constituency day yesterday. In the wineshop they told me to expect some double digit price increases in February for German and French wines, once their current stocks have run out. A furniture buyer said he was expecting 15% price hikes as a minimum for the imports from Euroland. The yen has risen fastest against the groggy pound. They couldn’t tell me what might happen to prices in the TV shop, but I would expect they will have to pass some of the grief on quite soon.

Allowing for stocks bought before the collapse in sterling in the last few months, and allowing for some importers taking out forward cover on the currency, you should nonetheless expect to see imports getting a lot dearer in the months ahead. If you help the shops today to move the cheaper product they have left, maybe they will then think about buying some replacements that are made in the UK. There are some good UK white wines and some attractive furniture to continue the theme of this piece. It’s time for the electrical and electronic manufacturers to think about making more here, now we are so much more competitive thanks to the fall in the pound. You can forget the new German car of course – if you ever did want one. They are dear already, especially when your second hand one has such a low value now.





  1. APL
    January 24, 2009

    JR: “They [The government] would prefer it if you flashed the plastic, ”

    Thereby contributing to the next disaster that is going to hit both the banks and the ‘man in the street’. Individual indebtedness.

    Savings rates at all time lows, thanks to the government discouraging saving.

    Credit card fraud pretty much unchecked. thanks to a combination of the banks preferring to defray the cost onto honest borrowers and governments refusal to permit those caught to be seen to be punished sufficiently harshly.


    Whoo hoo! Let’s shop!!

  2. Mike Gill
    January 24, 2009

    How about putting some numbers on the longer term prospects for the economy? Matthew Parris explains it in the Times today, and I think he must be right. Most of what passes for economic commentry these days is to encapsulate the latest event in apocalyptic phraseology. No one offers much in the way of calm analysis.

    There is much talk about restoring provision of credit and “getting the banks working”, but how much of this is a smokescreen for the brutal reality that lending criteria have suddenly been reset to those that prevailed 20 years ago, and are unlikely to be relaxed any time soon?

    How much is GDP likely to fall? The fall in financial services and credit conditions easily imply a GDP fall of 10%

    How is Government going to afford itself? This is the really scary issue. It seems to me that Government expenditure has to reduce by 20%, but that this is politically impossible unless we get into a National emergency. The failure to cut expenditure might be the cause of such an emergency. The huge dread is the Government being forced to print money to pay its own bills, and hyperinflation. Can this be avoided?

    On the positive side, we have the most amazing array of technology that has blossomed over only the last decade or so. One effect of this is to empower the individual, and spur the creation of new enterprises. Your blog is an example


    Reply: yes, technology is still leaping ahead, and is delivering so much more for less. Government does need to make its contribution to reducing costs and borrowing. Expect a big drop in GDP by the standards of recessions in the last 30 years, but not as much as 10%.

    1. APL
      January 24, 2009

      Mike Gill: “How about putting some numbers on the longer term prospects for the economy?”

      If you are not already very depressed. Have a look at this ..

      Mike Gill: “No one offers much in the way of calm analysis.”

      True, you won’t find analysis in the main stream media. That is why our politicians can claim “no one saw this coming”, which is simply not true.

      Try Mish. he has been giving spot on commentary for ages.

      Try Denninger, at least eighteen months of archived material there.

      Try Financial Sense, Chris Puplava. He has an excellent site there, just lately I think events have overtaken him, but nevertheless his forcasts of the direction the US economy was heading have proved 98% accurate over the four or so years I have been listening to him.

      Reply: This site also predicted the sharp downturn, forecasting it during 2007, the increase then the decrease in price inflation, the fall in the pound and the severity of the banking crash.

      1. Acorn
        January 24, 2009

        Don’t forget “Money Morning”.

        See the following, particularly the bit “For Britain, this has three appalling costs”.

        Here is an example of what we are up against. My local supermarket has just closed its local convenience store and revamped its big store five hundred yards up the road. In the space of a few days the big store was refitted, new shelving etc and re-stocked isle by isle. Stock was moving round the shop each day; necessary for the shop to keep trading. New post office built in the corner of the big shop to replace the one in the convenience store; no break in service.

        The only thing that hasn’t yet moved is the Post Box that was outside the convenience store. This is where the dead hand of government gets involved. It needs planning permission to plant the letter box in its new position at the big store, we are still waiting.

        What hope do we have of a recovery when we have a ball and chain around the parts of the economy that we need to do the job.

      2. APL
        January 24, 2009

        JR: “This site also predicted the sharp downturn, forecasting it during 2007, ..”

        Indeed you did. But since we are already here, I didn’t think it necessary to cite you in the list. Sorry.

  3. Brian Tomkinson
    January 24, 2009

    So we are about to see another bout of inflation, not the much trailed deflation. Hardly surprising given the catastrophic fall in the pound. Let’s not forget that the CPI is still 50% higher than the government target. How can we allow this wrecker of our economy to reap more damage for up to another 16 months?!

  4. Raedwald
    January 24, 2009

    But given that DEFRA’s 2007 figures demonstrate that 51% of the food we consume is imported, you may also find in the next few weeks that you can’t afford to put a decent dinner on that beautifully curved European dining table.

    The combination of consumer price inflation and that resulting from quantitative easing offers a truly alarming prospect.

  5. Robert Eve
    January 24, 2009

    John – I particularly like ‘Taxes may go up as well as up’!!

  6. rugfish
    January 24, 2009

    Very humorous Mr Redwood.

    I have made a stand myself.
    Yesterday my son told me that his teacher said he must take a bottle of water to P.E. lessons in future. ( For what reason the school doesn’t have drinking water defies me ), however he asked my son to fetch water with him next time.

    My son in turn asked for “some of that mineral water you get”.

    I says “what’s wrong with tap water” ?

    To which he replied, “But that will deplete the oceans” ??? ( He’s 7 years old ).

    I says, “Son, all water is the same but it just has different things in it, like some of it has tea or coffee, or beer, or wine, or salt like the ocean, and it it’s all a matter of taste”, Further, that all water is contained in the eco-system and ends up back in the oceans and even we are made of 90% water”………”So you see, tap water is the quickest and cleanest way and the cheapest way of taking water to school”…….He thought for a minute and agreed with me and then said “Can I have one of them Spider-Man water bottles then”…….I got one for him on the way to school yesterday for 99p and noticed it was made in Taiwan but at least it’s saved me a quid a week because the school doesn’t supply drinking water.

  7. Bill
    January 24, 2009

    So your constituency day, began with research in the wine shop? Mm

    Advice to blog readers as the £ approaches the Rupee offset the rising costs of imports by making your own drinks – If imports cause your favourite tipple to increase – just dilute your favourite drink with anti freeze (By the % of the price hike, but if the hike exceeds 50% don’t dilute further than this without medical advice) – which you can buy in bulk and is not imported – the resulting “Broadmoor cocktail” * will keep your drinking expenditure at pre £ collapse levels.


    *AKA Rab C Nesbitt

    See FT today – Germans are buying German produced cars in the UK and taking them back to Germany – good article

  8. savonarola
    January 24, 2009

    The size of the finacial services sector in the US and the UK will contract relative to GDP, post a weak recovery in 2010/11. Financial services in US/UK outperformed broader economy because of the potemkin nature of a significant % of their activities. This feature of their growth is dead and buried for the next decade.
    Govt/Quangos rode the tide of the inflated tax receipts from this sector. There will be a structural reduction in tax receipts.
    Govt must act quickly to slash costs by immediately taking an axe to quangos, as and when employment contracts expire salary and benefits must be cut, numbers reduced.
    No employment of outside consultants.
    Scrap IT projects.
    Freeeze all new staff appointments.

    1. Paul
      January 25, 2009

      Yes, but that monocular misfit will not do it, will he ? You might as well ask him to saw his arm off with a kitchen knife.

      (Aside; I actually think he’s incapable of admitting error even to himself. Unlike Mrs T who did occasionally U-Turn on the qt when required)

      I work in Education, the Missus is a Nurse. In both fields the extension of pointless regulation and bureaucracy is quite amazing ; reams of highly paid people laying the law down who know absolutely nothing about the subject they’re giving instructions on.

      They all duplicate each other, and spend vast amounts of time and resources on internal politics (the squabbles between Social Services and CSCI are a wonder to behold). Great swathes of them need to be simply shut down.

      Most of them will claim doing so will create terrible dangers. This is codswallop. All they actually do is generate paperwork. The classic example of this is Climbie/Baby-P ; all the wondrous changes simply meant the incompetence was better documented (and, of course, OFSTED thought Haringey were good, didn’t they ; because “good” is defined as compliance with targets and bureaucracy, not protecting children.).

  9. The Half-Blood Welshman
    January 24, 2009


    Is that deliberate or is it a Freudian slip?

    I love it, whichever it is!

    Reply: It was deliberate and is staying!

  10. Adrian Peirson
    January 24, 2009

    I don’t want to appear negative but I understand you can eat dandelion leaves.

  11. Bazman
    January 24, 2009

    If it keeps going down as fast we will all be drinking that most British of wines Buckfast, with Nobby and Sid under the arches, worrying about the carbon emissions from our clothes and the burning furniture in the oil drum brazier.

  12. Madasafish
    January 24, 2009

    Well as a good and loyal consumer in the past 4 months we bought:
    A new washing machine (Bosch) as the last one died after 9 years.
    A new 32inch LSD Sony £300 from Richer Sounds as we are going digital and our 15 year old analogue one was partially faulty and will be unusable in June 2009 as the switch to digital happens.

    Neither of course was made in the UK.

    Now that’s it as far as major consumer items in the madasafish household.

    We will do some home refurbishment, but our cars run well (one French, one Japanese) and we will not spend recklessly as times are hard.

    Meanwhile I am buying stocks in gold and silver producers as any rise in gold and silver prices leads to a multiplier effect on stock prices – eg gold rises 20%, stocks double etc.

    Anyone see a trend?

    Quiet clear where the issues are for the UK economy.

    I have lived through all the recessions since the late 1960s so have seen how bad they are..

    We have a banking crisis AND a credit squeeze and a WORLDWIDE recession. I have not seen this before. It should prove very very nasty.

    Put bluntly, I am surprised how little real concern there is. If consumers realized how bad things are likely to be, I would expect spending to fall off a cliff.

    Which says to me it’s going to get much worse when they do realize.

    I look at Gordon Brown and A Darling and see how haggard they look and understand why.

    There is a lot of hard work and pain before our economy is rebalanced..

  13. oldtimer
    January 24, 2009

    Coincidentally I received a letter this morning about a forthcoming tour to Japan. It reads:
    “However the £/Yen rate has continued to drop dramatically in 2009, this week suddenly reaching an all time low which is 8% below the previous record. We have been advised this is a direct consequence of the apparent huge government deficits highlighted by the losses made by the Royal Bank of Scotland. The exchange rate change now represents a 76% increase in costs in Japan, since the tour price was fixed, and the tour is no longer viable at the current price.”

    It is obvious that many outside the UK are starting to wonder how much longer the UK will be viable. It is clear that the UK government`s business model is not viable and needs fundamental reworking and reform – something we will not get from Mr Brown.

  14. Rob
    January 24, 2009

    Is there surely now not an overwhelming case for a Public Enquiry into the regulatory regime which has so catastrophically failed to prevent the banks failign in this manner? Gordon Brown claims that the FSA is one of the best regulatory bodies in the world, but signally failed to prevent this situation developing. Confidence in the banking sector and the city as a central institution will only be restored to any extent if the previous political failings of this incompetent and corrupt government are exposed and corrected.

  15. Simon D
    January 24, 2009

    My perception is that the two small retail parks near us are not doing a great deal of business. You can tell just by looking at the number of cars outside and the shopper-free zones within. In our area many of our Eastern Europe builders seem to have disappeared, yet my neighbour has just cut an incredible deal for a new roof on his house. He paid only a third of what was the “going rate” two years ago. Ten workmen finished the job in a day.

    People are obtaining a near-zero return on their savings and looking down the barrel of an import-driven period of inflation. The best course of action is to batten down the hatches and defer unnecessary spending.

    Meanwhile, I am fed up of all the analysis of how we got here. We are where we are. The Government must tell us what the Grand Plan is. Clearly we cannot go back to the status quo on 1st January 2008 because that could only lead us back to the problems we face now. The Government must sketch in the future. We need to know what the end game is. Once it has supplied us with the new plan for UK Plc until. say, the end of 2010 we can take stock of what to do. Do we spend or do we save? Like truffle hunters, we need advice on when to go out looking for green shoots and signs of rising house prices.

    Until the Government has revealed the plan my advice is:

    1. Spend only what you need to.
    2. Try to keep you savings out of Sterling.
    3. Keep away from UK companies as stock market investments.

    Next up, watch for the catastrophe which will overtake the UK travel industry in mid 2009.

    Health warning: Shares, Euros, dollars and gold can go down as well as up. Unpopular Governments calling elections in the middle of recessions seriously risk losing office and should obtain proper advice from a qualified counsellor before any rash decisions are made.

  16. Graham Hamblin
    January 24, 2009

    On Question Time on Thursday Janet Daley forecast the Euro would implode withing six months.

    My fingers are crossed!

  17. StephenB
    January 24, 2009

    I agree totally about the wine and did a day trip to Calais last week to stock up. At the moment, some of the UK shops there still have sterling priced stock based on £1 = 1.3euros, but this won’t last.

    To support the UK wine industry, we should give help to the local growers, as import substitution helps our trade deficit. But, I guess the EU would not allow this.

    Of course, global warming is meant to turn us into a major wine producer………..!

  18. Steve Tierney
    January 24, 2009


    More common sense… well done!

    I should point out that I’ve been predicting inflation (indeed – Hyper Inflation) for many months now. Lots and lots of “non-mainstream” commentators have.

    Time to dump the “official” economists who are too steeped in personal interest and lack imagination and allow free-thinking economic commentators to have their say. They are right much more often.

    My present prediction – A run on the pound and the dollar within 12 months, hyper-inflation, a massive collapse in the Eurozone. Nothing good is coming.

  19. Paul Maunders
    January 24, 2009

    If anyone likes going to the continent for skiing, I suggest they do it before the end of this winter season.

    Unfortunately the British supply of mountain pistes is very much inferior to that of our European neighbours, and so when the pound sinks we might all have to stick to the dry slopes.

  20. Mark J
    January 24, 2009

    Mr Redwood as you quite rightly stated “The government would like you to go shopping. They would prefer it if you flashed the plastic, as they want you to go borrowing as well.”

    I cannot understand the mentality of this Government, people are in severe financial problems at the moment due to Gordon Brown encouraging vast borrowing over the last 10 years.

    Why would people want to get themselves further in debt? Surely we should be encouraged to save money (with bank accounts paying a decent interest rate) not spend even more!

  21. Johnny Norfolk
    January 24, 2009

    I am sure runaway inflation wil be next ( as per last labour government was it 28 or 30%)

    Brown is going to print more money. That will be the end of any confidence that may have been left.

    All imports will rise. and we will have the return of the’ i am backing Briton’ campagne.. was it led by Hughie Green last time?

    All could have been avoided but each generation votes in Labour and learns the hard way.

  22. mikestallard
    January 24, 2009

    First of all, I accuse our host of being the only politician in living memory – since, in fact Winston Churchill – to have a sense of humour (in capital letters too!)
    Second of all, Lord (Dennis) Healey in the Daily Telegraph actually said these winged words:
    “It might be sensible, yes. (to cut taxes) We’ve got far too many people working in the public sector…….. It would be much easier to cut taxes these days: but Gordon would would have to watch carefully the areas he made them in. I agree with what Digby Jones said. There’s (sic) probably twice as many people working in the public sector as is necessary. And the number has grown for institutional reasons because institutions like to be as big as possible. I think it is very likely that Gordon will take what Digby says seriously.” Hey, if Gordon (sic) did cut back the State and then slash taxes radically for everyone, I reckon he would get my vote. Moreover, he would get us spending too, when we have all paid off our credit cards.
    If the Conservatives are to win the election, then it is imperative that they keep a light touch, that they are positive and that they have a realistic plan.
    Is Denis Healey the new Obama?

  23. TomTom
    January 24, 2009

    German and French wine won’t go up in price. They desperately need Britons to buy – or Chile and Oz and USA and South Africa will wipe French and German and Spanish and Italian wines from the market.

    Wine drinking is declining in Italy, France, Portugal, Spain and overproduction is rife. German vintners get huge marketing subsidies but cannoy establish a foothold.

    If the Euro-Zone raises wine prices they will need to turn it into vinegar or grub out yet more wines. Deflation affects their domestic markets too

  24. Adrian Peirson
    January 24, 2009

    So having Deluded us all into debt, handed hundreds of billions of Bailout money to the International Banks, indebted our children to the tune of £1Trillion through totally unnecesary Govt Borrowing, Gordon now wants us to have one last spending spree so Merv can pull the rug our from under us onelast time.
    Tell me that Westminster is not simply a Front for the Global Banking Industry intent on enslaving the world.

    1. Adam Collyer
      January 24, 2009

      £1 trillion may soon only be enough for a couple of bottles of Chablis.

  25. Matthew Reynolds
    January 24, 2009

    It was mean of Brown & Darling to raise excise duties on alcohol
    by more than the amount that the cost of those beverages was reduced by the VAT reduction. In view of the falling £ forcing up wine prices could they not consider slashing alcohol duties by say 20% to save our pubs and to stop people missing out on one of life’s pleasures . Lower duty will cut smuggling and boost business in the UK- it will even out the unfairness caused by the lower pound.

    My policy is to have one single credit card ( the M&S one !), to only spend what one has and to pay it by direct debit . That means that you do not get any nasty interest charges while having the benefit of money off vouchers four times a year. Direct debit repayment is wise as you do not miss repayment dates and it forces one to live within ones means. This keeps life simple and my other cards ( loyalty ones for Boots, Iceland and Co-Op ) will produce points that can fund future expenditure thus cutting credit card bills long-term. My staff discount card at M&S also helps – one might as well use plastic in a common-sense way to suit your own interests. I impose discipline by only having a set amount of hard cash to spend via cash back so that I can meet the modest credit card bill and other direct debits etc.

    I believe is good house keeping not in mindless profligacy – John Redwood is right in what he says !

  26. david
    January 24, 2009

    Sorry John still haven’t seen any statement on the 3rd runway.

    One of the backbenchers fronting calls for the party to support expansion, David Wilshire, the MP for Spelthorne in Surrey, has met Mr Cameron and Ms Villiers to try to change the party’s position. He has promised not to start a high-profile campaign.

    “Provided that the environmental conditions can be met, which the Government has introduced, expansion should be supported,” he said.

    Mr Wilshire will ensure, along with the other leading pro-expansion Tory MP Ian Taylor, that he is not in the chamber when the vote takes place on Wednesday. The number of Tories planning to abstain or vote with the Government is said to be well into double figures, which should help the Government win the vote narrowly.

    I do hope you aren’t skulking at the bottom of the trench, any chance you’ll be putting your head above the parapet?

  27. Ian Jones
    January 24, 2009


    Funnily enough I was thinking this exact point when I went out shopping here in Tokyo yesterday. Whilst converting the cost of my purchases back into pounds I realised that anyone buying in pounds is in big trouble!!

    To highlight it, over Christmas I received a Sony MP3 player bought from Amazon UK. It cost 80 pounds (still available). I see it in a good priced retailer in Japan for 22,000 yen = 178 pounds at today’s rate!!

    Once the currency hedges run out in the next few months and once UK retailers have to buy the new years stock you will see prices accelerate.

  28. rugfish
    January 25, 2009

    Surely Mr Brown can turn water into wine or have I missed something ?

  29. Adrian Peirson
    January 25, 2009

    1930’s German Wheelbarrow for Sale, £1.5 Trillion ono.

  30. Jase Beasley
    March 20, 2009

    I can’t wait til he goes on tour again!!!! Im definitely in there!!! I hope they takin a break. They need time away

  31. Jerome Dyer
    March 20, 2009

    i looove this song!! it definitly stands out!!

  32. I googled “import substitution” and found this ten-month old thread. Things have not got better here in the future, nor more real. As someone who tried to get a job in the 1980s I remember people making a fuss about the problem then; it was on the news. This time around, commentators seem to believe that a bit more spending on Chinese goods, another spending announcement will put things right in the end. Stone Henge Visitors Centre was the latest spending announcement.

    I do have one modest proposal for politicians which is to checkout the British Fashion Council, an organisation of clothes importers which government consults on how to increase exports. Strange but true.

    It’s a problem for British clothes manufacturers to get their old-fashioned, slow-to-deliver products into UK chain stores and according to one speaker at Fashion Expo in 2008 it can’t be done. Another trade association, the British Retail Consortium, is organising a write-in to Euro MPs about tariffs. Their form-letter states that there are no cheap European shoe factories. I know this to be untrue and could list half a dozen, but big retailers have a culture and a way of doing things all of their own which prevents people in the UK buying the shoes and clothes that they work to produce.

    The modest proposal? Take UK Trade and Investment’s Grant to the British Fashion Council and spend it on UK Trade and Investment. I’m sure the wing of Somerset House that they occupy could find another tenant.

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