Feel-bad factor predicted as population falls

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The Chancellor may be able to look forward to a revival in consumer spending this year but his counterparts in the next century will face a serious "feel-bad" problem. Levels of consumer spending will fall as the British population shrinks after about 2020, according to a new report by the Economic and Social Research Council (ESRC).

The housing market will be hardest hit, it predicts. A housing surplus will depress prices. This is likely to be reinforced by the inheritance of property bequeathed to their heirs by the first post-war generation of owner occupiers.

The regional differences will be pronounced, however. The population in East Anglia, the East Midlands, the South West and South East will continue to grow, at the expense of the North and London.

Presenting the report yesterday as part of the Department of Trade and Industry's contribution to Science Week, Professor Richard Scase, of the University of Kent, said there were other economic and social trends anticipated in the next two decades which would mean profound changes in consumer markets.

Talking up the usefulness of ESRC-funded academic research as opposed to traditional market research, he said: "Businesses should take a step back and look at the social and economic forces that shape long-term consumer trends to enable them to anticipate these changes."

Other trends he highlighted included growing inequality of income, job insecurity, the ageing of the population, rising women's incomes, and the growing proportion of one- person households and single-parent families.

Some of these are already well-publicised. For instance, the proportion of over-65s in the population will increase from 20 per cent to 24 per cent between 2000 and 2021. During the next 15 years the number of consumers aged 50-65 will climb by 2.8 million to 11.6 million, while the number of 15 to 30-year-olds will be static. Businesses serving the elderly should thrive.

By the year 2000, a third of households will consist of one person - a high proportion of them elderly - buying goods and services for themselves. Lone parents will account for more than 11 per cent of all households. They tend to be poorer than average and to buy fewer of the household goods married couples furnish their nests with. The technological revolution is leaving them behind.

The consumer implications of other trends identified by Professor Scase are less well-known. For instance there is likely to be a significant rise in the number of women in professional and managerial jobs. By 2000 more than a third of women employees will be in such posts.

The evidence from the United States suggests demand for labour saving devices, security measures and new services such as teleshopping and multi- media will expand as a result.

Job insecurity will favour products that are durable and functional. Luxuries and credit purchases could decline.