Page last updated at 00:03 GMT, Wednesday, 13 January 2010

Recession babies waiting for a growth spurt

Baby Frank
Baby Frank tries to get to grips with calculating the family finances

By Kevin Peachey
Personal finance reporter, BBC News, Brighton

The UK's babies are likely to experience something new in January - not their first words, but the first confirmation that they are living in a growing economy.

They will not be showing any interest in fiscal policy, but their parents - who may well have felt the effects of the recession - will be pleased to see an economic growth spurt.

With the UK economy having been shrinking since April 2008, signs of a recovery have taken longer than the time it takes for some youngsters to learn to walk.

Q2 2008: -0.1%
Q3 2008: -0.7%
Q4 2008: -1.8%
Q1 2009: -2.5%
Q2 2009: -0.6%
Q3 2009: -0.2%

But after six successive quarters of negative growth, GDP is widely expected to have returned to growth in the last three months of 2009, although the financial effects for many new parents may be felt for some time yet.

Baby talk

For mums meeting at BubHub - a not-for profit parents and babies group in Brighton - the discussion centres more on feeding times and cloth nappies than on the latest GDP figures.

Fun is never far away in groups such as this, be it a baby grinning through a crawling tunnel or a toddler playing up for the camera.

But beneath the surface, it is not difficult to find how the economic downturn has had a direct affect on family life.

Baby Ellie
All sorts of costs occur when a new baby arrives

Baby Frank is the youngest of seven in Wendy Robinson's family. He was born in the same month - January 2009 - as his dad was made redundant as manager of a Brighton club.

"They could not afford to pay him anymore," she says, as Frank fiddles with an abacus.

"We do not save as much and we have to look for bargains, but the upside is that he could spend time with Frank in the first year when babies change a lot."

Loveday Pope, another mum attending the group, was on maternity leave when her husband could only find part-time employment as a hairdresser.

"Our family has been affected hugely," she says, with a 17-year-old also at home looking for work.

Daughter Daisy has been growing out of clothes and is keen for entertainment. Her parents have been making the most of charity shops and car boot sales to find things for her.

But with no savings cushion, it was the need for a new washing machine - put to regular use with a baby in the house - that really stretched the finances and pushed them into borrowing money from a member of the family.

Visiting an excited grandmother has also led to travel costs.

Community spirit

The recession has sparked a series of money saving television programmes and some surveys have suggested a rise in popularity of "traditional" activities and toys.

Roshnii Rose and Surya
It feels like we are keeping a sense of tradition alive
Roshnii Rose

Yet, convinced that parents will always spend on their babies, retailers such as Mothercare and Mamas and Papas have started, or are planning, overseas expansion plans.

Closer to home, Roshnii Rose and Sophie Passmore set up the BubHub club in Brighton with a wish of meeting likeminded parents with strong opinions about sustainable living.

That means they are promoting the exchange of baby items, borrowing books, washable nappies, and making toys and clothes rather than buying them.

"It feels like we are keeping a sense of tradition alive, when all eyes are on the next technological advance," says Roshnii.

That might not be every parent's cup of tea, but few could argue with the financial advantages of sharing toys and clothes rather than always buying new.

According to the mums at the group, this was not driven primarily by the effects of the recession, but by the shift from full-time work to maternity pay.

It is still a big financial penalty to have children
Narmada Thiranagama, TUC

"It is a sudden change in behaviour and income," says Sophie Passmore.

She carried a small notebook around to chart the family's spending and budget during her maternity leave.

The TUC has been campaigning for an extension to paid maternity leave from 39 weeks to 52 weeks and for the second six months of maternity leave to be transferable from mother to father.

"It is still a big financial penalty to have children and it affects mothers' working lives," says Narmada Thiranagama, policy officer for women's equality at the TUC.

At present, all employed new mothers are entitled to 52 weeks' maternity leave, but are only paid for 39 of them.

A mother with 26 weeks' service with an employer by the 15th week before the baby is due, is entitled to statutory maternity pay (SMP), which is set at 90% of earnings for the first six weeks, and then at £123.06 for the remaining 33 weeks.

"Their income is affected for many years afterwards," Ms Thiranagama argues.

'Boomerang children'

For many parents, this financial burden shows no sign of ending - even when their children reach their 30s.

Baby Daisy
Daisy's parents are hoping to see some light at the end of the tunnel

Official statistics show that greater numbers of young men are becoming mummy's boys - still staying at home in their mid-20s to early 30s.

Young adults are increasingly moving out to study at university, then returning to the family home with student debts and little opportunity to get on the property ladder.

They are referred to as "boomerang children". More people of this age group were living with the parents in 2008 than in 1998, according to the Office for National Statistics.

More than one in 10 men aged 30 to 34 were still living in the family home, compared with fewer than one in 20 women.

Areas such as Northern Ireland, Strathclyde, the West Midlands and outer London had particularly high numbers of young adults living in the parental home.

"Many more advantaged young adults are not ready to 'settle down' during their 20s and are likely to return to the parental home before setting off once more," a report for the ONS says.

Former US President Herbert Hoover said that "children are our most valuable natural resource".

While this is no doubt true, all parents realise that these children require a considerable amount of financial investment.

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