And it would seem that the prediction I made towards the end of the project for the BBC was pretty accurate - as listed below:
| Previous month | 4 week experiment | ||
| Mortgage | Move from fixed rate to tracker | 1200 | 950 |
| Utilities | Reduce energy consumption | 125 | 90 |
| Council tax | Unchanged | 90 | 90 |
| Public transport | Walk more | 30 | 10 |
| Supermarket shop | Sacrifice quality for price | 120 | 90 |
| Breakfast, lunch, snacks | Abolish consumption | 75 | 0 |
| Eating out | Reduce and buy cheapest items | 160 | 100 |
| Beer | Ring fenced | 100 | 100 |
| Entertainment | Abolish gig, cinema, museum tickets etc | 80 | 10 |
| Helped by having National Trust & English Heritage passes for my birthday | |||
| Other expenses | 100 | 100 | |
| Totals | 2080 | 1540 | |
I cut by around 25%. Great. More than the government did (average 19% across departments).
Now, what to do with my £500+ savings.
Well sadly, I think they will all be used up by five main things (I keep thinking of more):
- The increase in VAT from 1st Jan to 20%
- Increased NI contributions
- Increased rail, tube and fuel fares
- Saving to cover any increase in interest rates
- Taking out unemployment insurance on my mortgage
The scary thing about this is that not only have I taken over £500 out of the consumer economy (the one which big business and the government needs to create jobs), but most of this money will need to be immediately spent on increased taxes, subsidies or saved to offset future potential problems.
You don't need to be a Nobel Prize winning economist to see that this doesn't spell great news for the British economy.
So perhaps the real learning of this experiment hasn't been about the rigour and difficulty in cutting so fast and deep into spending. The real lesson is that economically, people WILL need to save to ensure they can sustain their current lives as a result of the government's policies. And for those who can save, great, but money will come out of the economy as a result. For those who don't have anywhere else to cut, life is going to get very tough indeed.
