The economy and the consumer are difficult to read at present.

Financial news wires reveal a slump in one variable one day (usually about 2%) followed by a surge the next (usually about 2%). All this leads to the equity or stock markets rising and falling like the proverbial ‘whore’s drawers’ and, more importantly, the further tarnishing of the reputation of shares and financial products; the PER of equities seems to have been materially eroded.

The other outcome of this pendulum of news flow and market reaction is uncertainty. The predictive capabilities of financial analysts can be rubbished at the best of times and certainly much of the analysis of the past five years put a fair shine on rubbish. However, the market at the moment reflects a lack of conviction about how the UK will come through what is commonly described now as the coalition’s ‘austerity’ package.

That package is expected to be announced more clearly on 20 October with the spending review. With considerable job losses expected in the public sector, many of which will be white collar (differentiating this downturn from the 1980s) plus continued high-profile announcement of redundancies in the financial sector, consumer confidence can be expected to be low.

The summer housing market already reflects this, with prices falling, and the outlook for big ticket lines is also poor. The 2011 increase in VAT further underscores this point.

For the food industry there is the reassurance that as it is a necessity for life there will at least be steady demand. Additionally, while a further challenge to an already concerned consumer, the low level inflation is more of a virtue than a vice for the industry; put it this way, it is preferable to deflation.

For now we see relative stability and, yes, the sun will still rise; it is challenging but also manageable. Folk may continue to eat out less and promotions will remain important, but we still baulk at the idea of an industry price war the nuclear option as we call it. That would transfer too much value, to our minds, from investors in food businesses (public and private) to consumers.

Until there is greater clarity as to the robustness of the economy though, uncertainty, the bane of investment markets, will persist and that will weigh on sentiment. We see ourselves as neither optimists nor pessimists, but realists.