David Prosser: Sainsbury's has to party while it can

Outlook Eat, drink and be merry, for tomorrow we die. That, reading between the lines of Justin King's assessment yesterday of Britain's economic outlook, seems to be where he thinks customers of Sainsbury's – and consumers generally – are at right now.

The good news for consumers is that with inflation low – food inflation has actually been negative in the past two months – the same budget goes further these days. That may explain why retailers such as Sainsbury's has been able to migrate customers on to more expensive product ranges in recent months.

The Sainsbury's chief executive, however, fears many of his customers are dining at their own versions of the last supper (presumably they're enjoying goods from his Taste the Difference range). They'll be able to party until Christmas, but come the new year, as tax rises bite, unemployment continues to rise and – eventually – interest rates begin to creep back up, the hangover is going to be nasty.

In that prognosis, Mr King is markedly less optimistic than his opposite number at Tesco, Sir Terry Leahy, who said earlier this week that he thought Britain was through the worst of the slowdown. But in fact, the Sainsbury's boss is on the side of the majority. Both Marks & Spencer's Sir Stuart Rose and Next's Simon Wolfson have made similarly cautious remarks in recent weeks, downplaying expectations of a strong recovery in 2010.

It's difficult to disagree with the consensus view. The value of the year-long VAT rate cut has been debatable, for example, but you can bet that customers will notice all the fuss about the concession's disappearance in January. Within months of the end of that tax break, we are likely to be facing a Budget from George "we're all in this together" Osborne, which hardly bodes well for the household finances (pay freezes don't tend to encourage spending). And even if the recession has now formally ended – though economists increasingly doubt that it has – joblessness won't come down before next summer.

The post-Christmas period could see a particular spike in the unemployment figures. Like other retailers, Sainsbury's is hiring extra staff for the festive season – 20,000 in its case – but these will be temporary jobs, so those workers will be back on the employment hunt come January.

Does Mr King's view of the economic outlook also inform his career plans? Yet again he dodged questions yesterday about his interest in the top job at Marks & Spencer once Sir Stuart stands down from his executive chairman role next year. And why would you move to M&S in the midst of a consumer spending downturn? Sainsbury's is likely to prove much more resilient.