Newspaper article The Evening Standard (London, England)

When the Folk Who Drive Ford Fiestas Start to Feel the Pinch, the Economy May Stall

Newspaper article The Evening Standard (London, England)

When the Folk Who Drive Ford Fiestas Start to Feel the Pinch, the Economy May Stall

Article excerpt

Byline: Russell Lynch

TONY Blair once coined the term "Mondeo Man" to epitomise the type of aspirational voter he was keen to win over. Almost two decades on -- and in much tougher economic times -- it's another set of drivers we need to be worried about this year. With apologies to the former prime minister, let's call them the "Fiesta folk".

It may be "more common than Wayne Rooney's sister" according to Top Gear but the Ford Fiesta is by far the best-selling car in Britain, with nearly 100,000 bought last year. As oil prices spiked $20 a barrel in the past two months, Middle England's car -- which already cost more than [pounds sterling]3000 a year in petrol to keep on the roads -- is becoming increasingly dear to fill.

Thanks to ING's number-crunchers, we can see that the $20 spike experienced so far is already good for an extra [pounds sterling]280 a year funnelled straight into the 45-litre tank of the most frequently seen car on the road. In these volatile times, a toxic mix of Middle East tensions, constrained Libyan production and demand from still-motoring emerging nations could easily keep prices at this level. If Iran's nuclear ambitions spark major intervention then all bets are off: $200 a barrel -- and an extra [pounds sterling]1200 a year in that Fiesta -- comes into view.

Most of us have no choice but to pay higher petrol prices. In economic parlance, it is "inelastic". What that means is that higher petrol prices are a direct tax on other spending, unless you're one of the minority who can find other, cheaper ways to get to work. Another thing about petrol is that it's the most visible price in the country: take a drive, and every few hundred yards you pass a forecourt which reminds you in foot-high numbers -- which only ever seem to rise -- how expensive this essential is getting. That isn't great for morale so it wouldn't be a big surprise to see it knocking back confidence elsewhere.

Soaring petrol prices -- now a fraction away from their all-time high of 137.43p last May -- aren't part of the plan. The Bank of England is hoping for a sharp fall in inflation this year and a corresponding opening-up of consumers' wallets as wages catch up with the cost of living for the first time in five years. …

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