Monday 26 July 2010

The age of Skiers

Two facts may interest you.

There are now more elderly people in the UK than there are children. The elderly are fitter, more adventurous and less concerned about leaving money for their children to inherit. Referred to as SKIERS, (Spending the kid's inheritance) they spend £100 billion a year according to The Independent, making them a force recognised both by politicians and marketers.

Another development is the growing amount of money returned by the tax office to charities through the gift aid scheme. In 2003/4 the sum was £577 million. Last year, in 2009/10, it had grown to just over a billion pounds, an increase of 73.5%.

Some charities are heavily dependent on Government funding and fear George Osborne’s austerity cuts. Other evidence suggests a fall in the number of private donors. All this means is that charities will have to work harder to attract donors, persuade them to give more often and in a more tax efficient manner.

Who gives to charitable causes?

The Target Group Index shows a marked skew towards the better off, in the social grades ABC1, and older. Many established charities have an average donor age of 70. People give to different causes, depending on the relevance of the appeal and its urgency, so it is possible to establish which cause will attract different types of donor. We analysed the TGI's lifestyle questions and identified seven clusters.

Dyed in the wool traditionalists will support heart, cancer and the poppy day appeals.

Cultured nest builders will contribute to schools and the arts.

Mid life moralists may be more inclined towards third world charities.

What they all have in common is the belief that they can make a difference and that they are morally bound to do so. Maslow in his insightful theory of The Hierarchy of Needs, described them as people whose basic needs are met, who are recognised in their community and have status. They are now in the stage of self-actualisation, when they ask themselves: Why am I here?

Wouldn't it be lovely if we all were in that state?

Wednesday 14 July 2010

A look on the bright side

The news is almost without exception bad.

Austerity measures taken by most of the world’s governments have raised fears that we may all fall back into recession. In Britain, this risk is real and though the coalition politicians are talking up the economy, they must know that 40% cuts in departmental budgets will mean increased public sector unemployment, a slack unlikely to be taken up by the private firms.

There will be increased pressure on banks to stay liquid, so lending -both to individuals and companies - will stay constrained. Falling consumer confidence may increase saving levels, but lower saving rates will reduce the income of savers.

But hang on!

Life hasn't been so bad if you are still in work, and most of us are. Unemployment rates are much lower than in the recession of the mid 70's. Mortgage holders have benefited from low interest rates. Credit card debts have fallen and fewer homeowners are borrowing from equity release schemes to fund or maintain an unsustainable lifestyle.

The British are beginning to understand the truth in Micawber’s dictum: Live within your means or the devil will get you. Actually he talked in terms of shillings and pence. The truth applies to businesses too, including UK Ltd.

The Economy needs to grow and Germany provides the template. A diverse industrial base, with their thriving automobile industry and now the leader in solar power technology. Our reliance on financial services makes us vulnerable to threats of exodus by these financial wheeler- dealers. Excessive reliance on this business has hurt even Jersey. Despite healthy surpluses in the past, they are considering a tax ceiling of 50%.

Currently the one industry that is doing well is tourism in Britain. In 2009, there were more domestic tourists than in the previous year, and this may surprise you, tourism contributes more to the economy than financial services.

The news from abroad is also good as far as travel is concerned. According to The International Air Transport Association, scheduled airlines showed an 11.7% increase in passenger traffic in May 2010, despite the European troubles relating to the ash cloud and British Airways’ battles with its cabin crews. This dispute affected passenger traffic from Heathrow, as well as those from Glasgow, Edinburgh and Aberdeen. Overall BAA airports showed a fall in passengers carried in June 2010 of 1.7% over the same month in 2009.

However, if BAA estimates are accepted, without the strikes, Heathrow would have carried 140,000 more passengers in June 2010, an increase of 2.5% over those of June 2009.

Recessions end when people get tired of feeling poor. Reliance on politicians to put things right is wrong. It's time to learn from Polonius's advice to his son: Borrowing takes the edge off husbandry.

So let’s work harder and reward yourself with a well earned holiday!