The UK woke to a blustery Monday morning today (12 September) and to the gloomy news that households in the country are yet to face the full effects of the 2008/09 economic slump.

Since the crash, households have been protected by benefits and other public expenditure but, according to a report published today by the London School of Economics, as governments cut spending and raise taxes to reduce deficits, incomes will be hit. And academics from the LSE, which researched conditions in 21 developed countries, warned that households will feel the effect for "up to five or ten years, or even longer" depending on when economic growth returns.

Countries such as Sweden and Germany, which the LSE says have "relatively healthy fiscal balances" will be less affected, while the likes of Ireland could be worst hit. The UK, the report claims, lies between the two extremes.

The report makes for sobering reading and reinforces comments made in recent weeks by food industry executives in the UK and the US. Last week, Dalton Philips, chief executive of UK retailer Morrisons, suggested consumers here were already noticing the effects. Philips said consumer confidence in the UK was "almost as low as it has ever been". Philips' comments echoed those made two weeks ago by Peter Marks, his counterpart at The Co-operative Group, who said trading conditions in the UK were the worst he had seen in 40 years of retailing.

However, while Marks reported that profits from The Co-op's food stores had fallen by 21%, Philips was last week able to unveil a set of financial results that analysts said indicated Morrisons was outperforming its rivals. The Morrisons chief executive said the UK's fourth-largest retailer had been able to meet to what he called a "growing professionalism" in how UK consumers shop. "People used to spend around a budget. Now they shop to a budget. This more professional approach to shopping plays to our strengths," he said.

Philips also provided an update on key Morrisons initiatives, including the development of its convenience stores, the launch of an online food offer and the relaunch of its own-label portfolio, which will be announced next month.

There was, however, more pessimism about trading in the US last week. PepsiCo CFO Hugh Johnston said what he called a "stagflationary environment" was affecting all FMCG companies. Speaking to an analyst conference in Boston, Johnston said a period of high inflation and low economic growth and forced all consumer goods firms to reassess their strategies.

Johnston did try to inject a note of optimism into his speech. "The environment we currently operate in will not remain challenging forever. Currency markets will rebalance and the market consumer will recover."

However, with many markets under pressure, it is, right now, hard to share Johnston's confidence.