Crunch takes shine off sterling

In the smiles and hugs among families and friends meeting in the North Terminal of London's Gatwick Airport, I got the initial indications of how Britain was slowly breaking under the strain of the global economic recession.

I make my way to the nearest phone box with a 20 pence (Dh1) coin (a phone box call in the United Kingdom used to cost 10 pence) only to find call charges had been raised to 40 pence (Dh2).

I have been out of the country but not for that long. I put 50 pence in the phone box and it lasts me 30 seconds.

This was just the beginning of a long line of experiences of the financial situation eating away at Britain.

The heavy snow and dreary weather hung heavy on the faces of most people I saw at the beginning of the year.

“As if we don't have our own problems, now our money is being given to the banks to bail them out,'' a friend tells me of Gordon Brown's earlier decision to effectively nationalise the banking sector to keep it afloat. “It's like paying twice.''

There was controversy over the decision of numerous banks to continue to pay out million in bonuses — effectively the fat cats being rewarded with taxpayer's money.

The worst snowfall in the UK in 30 years at the beginning of the year didn't help the mood — London came to a standstill, people were stranded in their homes and some died while they sledged down treacherously slippery hills.

Local authorities even had problems gritting the roads: “We have run out of money and now we've even run out of salt,'' another friend says.

Whatever the situation — be it sales or continuing expenses — one thing is for sure: Everybody wants your money.

“Every shop has a sale,'' I am told. I decide to test the theory on the small town of Horsham in West Sussex — in a relatively affluent area of southern England. It was no exaggeration — every shop was advertising a sale.

The situation was even worse in Guildford. To my surprise, the shops weren't even trying to hide the fact, with blatant wallpapered advertisements trying to entice shoppers with “credit-crunch'' sales and even designer shops offering “discounts up to 75 per cent''.

What took the biscuit was retailer Marks and Spencer — once considered a retail giant — who are now advertising the VAT (value-added tax) “slash''. VAT was cut from 17.5 per cent to 15 per cent at the end of last year.

However, this means that for every £250 (Dh1,403) spent under the new rates, £6.25 (Dh35) is saved by consumers.

Not exactly a fortune, considering the price of a standard-size pack of baby milk formula is about £6 (Dh33). Supermarkets have even started printing VAT savings on receipts, which is usually unheard of.

“I saved a whole 60 pence,'' a friend scoffs. After spending £25 (Dh140) on clothes, the VAT “slash'' is not exactly making him rich, he jokes.

I visit a well-known high-street clothing shop and enquire how long their “massive'' sale is on for. The shop assistant looks at me quizzically. “It's permanent, love,'' she says.

Friends tell me it is the same everywhere — instead of shop assistants pushing high-end goods to generate sales, they are now pointing out which goods can be found cheaper in their shop.

End-of-season sales are a normal occurrence in the UK. This year, however, things are different. These sales started in autumn (September/October) as usual and simply didn't end.

Prices were slashed before the peak Christmas shopping period, instead of afterwards, and still the sales continued into March 2009. Some supermarket chains even introduced the VAT cut before the government, in an attempt to lure in early Christmas shoppers.

Somewhere you can't even escape it, is your own home.

“I don't watch TV any more,'' a relative tells me, “it's so depressing to hear credit crunch this, credit crunch that.''

This is a sentiment expressed by most of people I spoke to. The British media, in fact, is being blamed by some for making the situation much worse.

Some even went so far to say that maybe the country wouldn't have gone into such downturn if the press hadn't “gone to town'' on the subject.

It is even seeping on to game shows — one I viewed had an engaged couple win a wedding and honeymoon. The groom had recently taken a pay-cut because of the financial crisis and so the couple could no longer afford to host a wedding, with no monetary support from their family.

Every front page of the daily newspapers I saw was leading with or had some mention of, the credit crunch.

Women's magazines are packed with “credit crunch outfits'' — advising women how to change their wardrobe by buying one new item and dressing it up with accessories and shoes that they already own.

Now households are being inundated with aggressive direct marketing campaigns. In some households, the phone rings five times a day.

Britain is breaking and the public aren't happy about it, tightening their purse strings.

And with the closure of a number of well-known tea retail outlets in the south of England, even the great British cup of tea isn't safe.