How spending got guilt-edged

It was suggested this week that the end of the boom has reintroduced us to the frugality that older people remember, but does everyone really share this new love of special offers?

WE HAVE always worn guilt well in this country, but while we used to keep it in the closet, saving it for almost uniquely Catholic occasions of sin, the boom and bust of the past 15 years might have forced us to wear an entirely new angst-ridden cloak.

According to a report published this week, Irish consumers might never recover from the guilt they feel about their over-the-top consumption during the boom years and are destined to ape those who endured the Great Depression and live out their days in a bubble of fretful frugality.

David McGee, retail director of PricewaterhouseCoopers (PwC), told a conference hosted by Checkoutmagazine that our sudden love of the cheaper things in life, including a reliance on special offers and own-label goods, was here to stay.

McGee said 90 per cent of people surveyed had found the same quality or better after they switched to cheaper products and – really twisting the knife – told delegates we now feel not only guilty but “stupid” about our pre-bust shopping habits.

But is that really the case? Have we really become a nation of long-term frugalists or would we revert to conspicuous consumption given half a chance?

A study by Amárach Consulting and published this month by the National Consumer Agency (NCA) suggests that our habit of shopping around might not be as enduring as PwC would have us believe. It found that the numbers seeking out better value actually fell last year, from 75 per cent to 67 per cent, while those listing convenience as a determining factor in where they shopped increased from 13 per cent to 17 per cent. Ann Fitzgerald, the agency’s chief executive, described the trend as “worrying” and said if it continues we could “fall back into old habits”.

THE IMPACTof the boom has affected people in different ways, with some in the middle of a most traumatic expectation shift and others breezing through the bust much as they did through the boom. Psychotherapist John Sharry accepts that the trauma of the bust "will take some time to heal", but he cautions against overstating the guilt risks.

“The response is going to be mixed and it has to do with personality types,” he says. “You will have people who will be very badly traumatised in the long term and others whose optimism will return gradually when the recession ends. And, of course, others, those who are addicted to spending, who will go back to their old ways as soon as they can.”

TV3’s Sybil Mulcahy could be described as a poster girl for the boom. She graduated in 1995, just as the Celtic Tiger was beginning to roar, and spent the good times swimming in Ireland’s celebrity pool, first as a news reporter with TV3 news and then as a presenter on the same station’s Xposé programme. As the tiger drew its last breath, Mulcahy moved into a more serious role as presenter on the station’s morning talk show.

She doesn’t buy the guilt line at all. “I earned the money and I spent it, so why should I feel guilty? I might not have any savings but I didn’t rack up any huge debt either.” Mulcahy is in step with the majority of Irish consumers – according to an Irish Times/Behaviour and Attitudes poll published late last year, only 41 per cent of respondents said they should have been more cautious in their spending during the good times while just 15 per cent wished they’d saved more.

One of the 15 per cent, who asked not to be named, is self-employed in the financial services sector and, like many of his peers, has been forced to lay off most of his staff and take a pay cut of more than 50 per cent just to keep his business afloat.

It was all so different five years ago when he was able to buy investment properties at the stroke of a bank manager’s pen and take his family to luxury villas on the Med for a month. He regrets his boom-time spending. “The people who say they never benefited from the Celtic Tiger are probably better off. They’re like people who had booked a ticket but then missed the Titanic.

“It’s those who borrowed huge sums to buy big houses and big cars and invested heavily in shares who are screwed,” he says. “We all felt like we were on the pig’s back but now we know it was all fiction. You base your decisions on experience. People in their 60s and 70s were more careful during the boom because they had experienced serious recessions, but those of us who were in our 30s or 40s had a more relaxed attitude. I’m fairly sure that when we hit our 50s we’ll be very reluctant to spend any money we have left because of what we are experiencing now.”

Everything he does now, he costs to the last cent. “We should feel guilty about what we did with our money. I know I should have been more careful. My family are living on less than €2,500 a month and that covers absolutely everything. During the boom, we struggled to keep our spending below six grand and I keep asking myself why I couldn’t have been more careful when times were good.”

JEAN O'BRIENset up the website cheapeats.ie, which points people towards bargain foods and good value restaurants. She felt the unpredictability of the jobs market when she was made redundant twice in 2002 when the companies she worked for got into difficulties. "That taught me a valuable lesson about the transient nature of the jobs market and I saw how quickly the rug can be pulled from under you."

She dismisses the generalised talk of collective guilt and says there were plenty of people, including virtually all her peers, who did not overspend in the boom. “I never had a desire to drive a big car or live in a €1 million house and yes, I did buy a lot of stuff I didn’t need, and once went to New York for a weekend, but beyond that I was always pretty careful with money so I don’t feel the same level of anxiety as others might because there has not been any great change in my circumstances between the boom and the bust.”

Psychotherapist John Sharry says the nation “needs to talk about what has happened and to take a balanced approach, the kind of approach that was missing during the boom. The reality is still very serious and will be for years to come but we need to tinge that reality with a little optimism too.”