Caroline Nodder: Cuts will affect public's willingness to spend

So, the axe has fallen. Our new Chancellor George Osborne got his first taste of what it's like to perform on the big political stage last week when he unveiled his long anticipated programme of cuts to get the country back on track financially.

As expected, the cuts are fairly severe and fairly widespread within the public sector with few areas escaping the reforming fiscal blade unscathed. But as with so many of Westminster's announcements, the real pain is not going to be felt by the man - and indeed pub - on the street for some months, even years, yet.

The public sector will now go into crisis mode, departments will be asked to decide how the savings will be made in practical terms and come January - a historically gloomy month anyway - heads will roll.

Pubs are an intrinsic part of the social fabric of our society and as such the cuts will undoubtedly affect the whole sector from a number of perspectives.

On the one hand, in areas reliant on public service workers for trade, takings will no doubt be hit first. Lower spend per head and fewer weekly visits by regular customers will need to be offset by licensees who need to think now about marketing to areas of the community likely to be less affected by the cuts - those who are retired or businesses not connected to the public sector. This is another blow for the very community pubs that have already taken the hardest hit through the recession anyway.

At the same time the cuts have affected the UK public's mood and willingness to spend. Anyone who had come out of recession mode and started flashing the cash again is now almost certain to pause and think. Maybe they will cut down the number of social nights out they have again until they are sure how the cuts affect their bank balance in the longer term.

Add to that the VAT rise in January and the post-Christmas belt-tightening we see at the start of each year might be worse in 2011 than usual - and that might push us back into recession again. A double-dip recession has been mooted by many pub company bosses and licensees I speak to as a distinct possibility next year.

In short, I think the pub trade is battening its hatches for a bumpy 2011. But there is hope - one mustn't forget that a country's economic cycle can too often be made worse by the mood of the nation. If people fear the worst then they don't spend and it creates that very scenario they fear.

So pubs have a role to play here. They are the nation's sounding board and indeed they are a gathering point for communities in both good and bad times. As such pubs can lift the collective spirit in a way no other institution can. People will be looking for comfort, value and a warm welcome while this financial black cloud scuds past and a good pub ticks all those boxes. Preparation is the key and if pubs have a clear plan, a quality offer and a top team of people behind them they will beat this.