Three to one. Hi, this is Neil Brennan. I'm a UK Social editor at Bloomberg. It's Kate Creator. I'm food editor here at Bloomberg in London. I'm Phil Aldrich, the senior economics reporter for the UK at Bloomberg News. My prediction for three is that one story that a lot of people will be talking about is Manchester United. If the Glazer family do a deal to sell Manchester United, I think that will reshape the way we think about big money deals in British football potentially. And in the
thing I'm most excited about is up cycled products. But this is going to be a very big year to see ingredients and products made from items like the pulp and the holes that are left over from oaknok production. And what I'm looking for this year is Rashi Selects Growth Plan. Business groups say the government has not got one. At the last growth plan, former Chancellor Quasi Quattings nearly blew up the economy, which sets a high bar for excitement levels and at least proves the plan that can
have an impact. My name is Conrad Quilty Harper and I'm the UK Digital editor at Bloomberg UK and my prediction is about another Elon musque hobby, specifically the SpaceX Dear Moon mission. The plan is to send a group of artists on a spaceship around the Moon next year, which sounds so crazy it might actually happen. I'm Bloomberg opinion columnist res Raphael, my name is Joe Eastern and I'm UK stocks reporter at Bloomberg. This is my prediction for three. I'm joint stay Pig. I'm the author of
Bloomberg's Money Distilled News Later. The valuable I'll be watching the next year is unemployment. That's going to be key to the severity of annualization and also to what harps we host places. Is it rolling strikes, A lengthening NHS wait list now seven point two million people and following house prices will make it very difficult for Rishi soon
acts conservatives to restore voter faith in the party. I reckon UK house builder stocks will rebound in the new year after dropping about fifty in two Those share prices is suggesting that there will be a sharp decline in UK property prices and builders will have to write down the value of the land that they own. That seems a little bit extreme to me, they want a personal note. I kind of hope it's true because I want to
buy a flat next year. I'm David Merritt's and I'm Franci Laqua and this is in the City Bomberg's podcast, connecting you to the stories and the voices at the heart of the City of London. Now this week, David, next, we're going to unpack the predictions and expectations for two
sectors at Briggs. Love to talk about retail and housing, absolutely so first onto retail shopping, and to help us to do that, we have our UK retail reporter Katie Linsel and opinion columnist Andrea Felsted, who writes a part consumer Goods and the Retail Industry. Thank you both for joining us. Thank you. As we go into are people spending less on high ticket items? Are they spending more
on other things? Well, we're seeing spend on real luxury brands hold up, because of course not everyone is impacted by the cost living crisis. But if we look at the more general spend across the population, we're really seeing that people are prioritizing essential goods. They are looking at their spent on food, They're looking at their spend on energy, and so really they're looking at those sort of crucial items.
We're seeing less spend on fashion. I think it's about three quarters of Brits and a recent survey I read of pulling back on buying sort of fashion and shoes and items like that. Um, so yes, it really is focusing on sort of crucial items that you have to have at home. I was in I was in the Westerndord Saturday for for a wedding and I've never seen so many people swarming the streets upper down Regent Street. Is that I think? Is it too early to say
obviously it's Saturday for Christmas? Looking like a boom? Tag did? This did not look like a capital city of a country in recession, which is supposedly where we are right now. Right it was booming. I mean I also stopped into a bit of sort of lunch break shopping at a brand that I weren't named necessarily, but they were really buzzing. And so I think in certain brands people are trying
to get their shopping done for Christmas. And also, of course we've had the rail strikes recently, so when there is some let up from that and some let up from the snow that stop people from getting out their homes potentially, then then they are using those windows to shop. Of course they're still also shopping online. But I think really the truth will be told in January when we see retailers come back and give us their figures for
how their Christmas training periods went. And also behind all of those or those images of people flocking to shops is inventory levels. And compared to this time last year, retailers are holding more inventory. They had to order very earlier in the year. They had to think about supply chain issues, which you know, ironically supply chains have got easier over the course of the year. They're holding more stock. They really need to shift it. So we've seen more
and more discounts and bigger discounts. So I think, yeah, we've got the truth ahead of us in January. And so there was also this pretty amazing actually Morgan Stanley report saying that young adults who live with their parents are fueling the luxury boom. So is it the case that you know, people are getting married less at the moment because everything is so expensive, they're stopping to rend moving out with their parents and buying a Gucci bag. I would take that with a pinch of salt. It
probably has got some impact on spending. But the truth is luxury has had a phenomenal run, particularly in the US. The US really has been the engine of luxury growth. And yes, some of that has been coming from young people. Young people have discovered luxury, but I'm not sure if
it's down to them living with their parents. I think it was due last year to crypto gains, to stock market gains, and we have seen some of that reverse um and there are signs that they you younger, more um, the younger consumer, who is more sensitive to macroeconomic conditions, has begun to pull back from luxury. I mean we've seen that year Andrew Ham, you know, LVMH become the biggest company by market value in Europe. It's it's powered parents overtaking London in fact, is the kind of biggest
market capitalization. From what you're saying, do we think we've peaked then in luxury off this phenomenal year, all this growth, Doree look a bit tougher than for the luxury end of the morning, It definitely does. As I said, the US really has been the engine of growth. For luxury um, crypto falls, stock market gyrations, that's all starting to take its tall on spending. Okay, the super richer still spending,
but that younger, more sensitive consumer. They've got inflation and they've got higher housing cost that is all starting to take its hole and luxury spending on. Where we've seen that most is in the secondhand watch market, so that had a really remarkable boom um this time last year, and over the last six months that's really calmed down. So that's an indication that some of that froth that was driven largely by crypto is starting to come out
of the market. But Katy, if you're in the market for a luxury handbag, and I'm not saying anyone here is, but if you were to be in the luxury market, I mean everything is four higher than it was even two years ago. So some people say, look, you buy some of these handbags and they're an investment piece, but how the hell can anyone afford it? Yeah, absolutely that
for many people that's just not accessible. And you know, by contrast with seeing anecdotes of families saying, you know, this Christmas, we're actually going to hold back from buying gifts for each other. We're going to focus on the food that we put on our Christmas table or people buying their loved ones essential goods. So yeah, I think
there is a definite split between the consumer here. So looking at the other end of the market then moving away from luxury, the people who are really feeling the pinch in this economy. Are they trading down? Are they doing I mean what what behavior are we seeing in kind of the supermarkets and the big the big department stores. Yeah, we've seen a lot of trading down this year already. So the German discount has, Algae and Little have gained a lot of market share. UM Algae has knocked Morrison's
off the spot of the fourth biggest UK grocer. UM and within supermarkets, but also seeing shoppers trade into own label goods, so they're really looking to save money in sort of every way possible. Um. There were anecdotes earlier this year or so. I think it was a tesco of shoppers asking for the checkout staff to sort of stop at forty pounds or you know, stop at a
certain level, we just can't spend any further. UM. And we've also seen supermarkets bring out sort of different sort of savings programs or different sort of credit options to help people try and spend more. So is there a department stories there? It come key that you look at as the kind of Bellweather on how people are spending in the UK, so that the oldies is the John Lewis and what are what are people actually buying also like things to make up for the huge rising energy cost.
I think Next has been seen as the high street bell Weather for quite some time. They're there ran very conservatively and but but even Next had to profit one I think on two occasions this year. Um, it's very hard for them to call that's what they keep saying. And of course Next cells range of products including homewears and furniture, and that is a really tricky market at the moment because people bought all those goods during the lockdowns, didn't they They don't need to be buying those sort
of items now during cost of living crisis. Um So yeah, I think Next is a key one to look at. Um. But people people are really pulling back from those more sort of frivolous purchases, the fashion, the furniture, and there's going to be an impact for some of these companies that could be funny dramatic. I mean, when you think about recessions passed, you think of boarded up shops right and high streets really taking the hit. And obviously my sojourn into the West End that isn't a reflection of
the country as a whole. But as I said, it was booming there. I mean, andreware, we're going to see boarded our shops. Are we seeing retailers possibly going to the wall next year if the froth is coming off the market more, that is possible. I actually don't think Christmas will be that bad. I think not much really has hit yet. Yes, we've had some energy increases, food increases, but we've had the government help on energy, and consumers are very good at adapting. As Katie said, they are
changing their behavior. So you see a headline very high level of inflation for the consumer, but they die all that out themselves by shopping in little, by trading down. So and the mortgage time one that that is being predicted that hasn't really hit yet. As we go through next year and more and more people will come off their fixed rates, So I think Christmas will be okay. But then when we get into January, singers are a
lot tougher. The credit card bill starts to land, the big energy bills come in, particularly after this cold snap, the more people roll off their fitxed rate mortgage. So I think it will be the first quarter of next year and into two thousand twenty three where we do see that Paine. When that happens, then I think we could see it's very likely that we see more of that pain and more of those casualties. But andrew to David's very good question about whether companies or you know,
sharps will go bust. The high street has changed so much since the last financial crisis. It's much bigger change. I guess that I've taken over the high street. So does that change the dynamics that it's not the independent shops that can go bust, Because at the end of the day, some of these bigger sharps, even if they don't do so well in certain parts of the country,
have deeper pockets. That's right. And when you look look at the casualties that we've had ad over the last safe three to five years, most of the big obvious names have gone, the ones that we all had on our watch. This Debonam's Arcadia. They've all gone already, so if there are casualties, they will be another it will
be another layer down off stores that that fail. We have also just jumping in there, we have seen sort of some key names going to insolve the s in just in recent weeks, and I think Andrew is really right the next quarter will be a really interesting one. So you know, if some of these recently that we've seen struggle Made dot Com, as I was saying, furniture a read difficult category and online only, you know, are they going to really keep shoppers loyalty in this kind
of environment. So yeah, we saw Made dot Com grey to insolvency jewels as well the high street fashion brand. Both of those are bought out of insolvency by Next and Mike Ashley's Empire Phrases group has also been doing a lot of buying upper struggling brands on the high Street. So for a lot of retailers, this is actually going to prove a bit of an opportunity, or at least
for those biggest, really really strong retailers. So I think want to see called at of M and AM interesting and you know it's I guess the first Christmas we've had for a while, sort of in the post COVID period, at least in this country. I mean there's a lot of it around obviously, but I think in terms of restrictions, people are less nervous about it. We talked about how COVID accelerated some changes to the economy and you know, the shift to online, where we are now all those
people teaming the streets. Still people want to visit retail locations or are they're going to do a lot more sitting on their sofas. David's been shocked. He experienced Oxford Street on Saturday. It was horrible. I mean, yeah, Oxford Street is the sort of pumping heart of our retail environment, isn't it. So it should be super busy at this time year. Um. Look, a lot of people shifted to
buying online during the during the COVID pandemic. We know that. Um, there's been a big surprise at how much that hasn't stuck really even though still how many people work from home and we've got a lot of hybrid working. It's been proven that people like to shop in person. It is only yes, yes, So there's been there's been a bit of a shock and your wayfare is another one that comes to mind, having to cut loads of jobs.
So it has been I think a bit of a wake up call for some of those online only brands that actually people do enjoy going back to shop in person. And then of course with Royal mail strikes, that also means that people wanted to shop for Christmas have found they can't depend on those deliveries arriving on time, and I think that's been really tough, especially for sort of small, more independent retailers who rely on Royal Mail. So there's
a mix going on at the moment. But yeah, I think online is not having the kind of happy ride that many expected. I was asked this morning, who in the newsroom has an electric blanket? My answer was who does not have an electric blanket? Time? Is that what people are buying at the moment energy efficient because the flavor? Yes, yeah, so definitely electric blankets sales are up. Usually air friers. I mean I was having a conversation this weekend about
air fryers. They're really taking off, and I think it was Curries who were saying last week at their earnings that they're at least trying to give the image that people are trading up within the electronic products that they offer, so looking to buy more energy friendly um, washing machines, tumble dryers, all these different products. Um. So there you go. There is a market for those goods at the moment. For our for Christmas everyone, I'm not I'm not sure
Mrs Merron would be fried turkey. Thanks. Um. So what Andrew, what are your other predictions for where this market is going to turn next year? I mean, you mentioned again about consumers getting smart about finding ways to save money. Um, the inflation seems to have peaked, right, so it's the picture of that going to get better next year. It could do, it could do. I think there's there's more more, you know, there's there's more pain still still to come.
I mean, I I would think unless inflation comes down very sharply, it looks it looks very tough for people next year. The other thing to watch will be employment because it consumers tend to change their habits and most when unfortunately they lose their jobs or they see their friends being made redundant. And thankfully we haven't seen large job losses yet. So if if employment can stay pretty stable,
and full then that should be good. But I think there are so many pressures next year that I think it is going to be a really, really difficult, difficult year. And while I'm optimistic for this Christmas already, I'm pessimistic for next Christmas. Andrew, do you have any insight into how many companies were able to raise prices in the last six eight months that won't be able to do so next year. Everybody is going to struggle to put
through more price increases. I mean, we've seen some of the prices come through, um, but next year we will still see more of it, particularly and consumer goods. And there tends to be a lag between modity costs going up and prices going up, and so we will still see more inflation coming through in consumer goods, and it's going to get harder to persuade people to pay those prices when they're incomes are under pressure. Do you agree with that, Katie Bleak Bleak forecast the FRAI is going
to be rough next year. I think employment is the key thing to look at, as Andrew says, um, and you know, to some extent, when we get out of the really cold weather, may things start to look a little bit better people that have to worry so much about energy bills. But yeah, there's there's a certain amount of time that we can all put up with our budgets being stretched to the extent that they are right. Um So, yeah, you don't speak to many retailers who
are upbeat at the moment. Let's bit that way. And also they're all finding it very hard to forecast, so they can't say at what stage next year it might start to get easier. Um So yes, I think for our pessimism is the way forward. Katie and Andrew, thank you so much for joining. Thank you thanks for listening to this week's in the City. We'll be back next week, but in the meantime, if you like our show, please head on over to Apple Podcasts or wherever you listen
to podcasts and a rate review. Unsubscribe. This episode was hosted by Me David Merritt and Me Francie Laqua. It was produced by Summersadi, editing and sound designed by Blake Maples and special thanks to Andrea Felsted and Katie Lindsel.