Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Chat

Join the discussion and chat with other Mumsnetters about everyday life, relationships and parenting.

Recession is here

110 replies

icelolly12 · 03/08/2023 14:50

With the rising prices, hiked interest rates, closures of shops now Wilko, plus in my area many local restaurants and cafes that had been open for years have recently announced they're having to close... I'm pretty sure we're in a recession and that it's going to get worse. Is anyone else feeling the same? Everybody in real life is acting as if everything is perfectly fine.

OP posts:
edwinbear · 03/08/2023 20:21

@Twentypastfour the July inflation figure will incorporate the new, lower, energy price cap, which will almost certainly, mean a further fall. The economists at my bank are forecasting 6.7%, they’ve been pretty accurate over the last 12 months or so. If that’s the case, with wage inflation at c.7.7%, the balance is starting to tip.

@CloudyMcCloud I agree, it’s a very delicate balancing act. I’m not convinced by Bailey, personally, I think they should have started raising rates earlier, they left it too late and are now playing catch up which has played havoc with the market (therefore mortgage) fixed rates. He’s a bit of a baffoon in my view, but I still think we’re coming out the other side. I certainly hope so. We’re forecasting first rate cuts next summer, I bloody hope so, I’m on a tracker mortgage!

edwinbear · 03/08/2023 20:28

@Clavinova company insolvencies are also at the highest level since 2009. Individual insolvencies are 8% lower than last quarter but companies are certainly feeling the pain. Which, in my opinion, is why the BoE only went with a 0.25% increase today rather than 0.50%. They can see the effects are starting to filter through so don’t need to be so aggressive.

Dymaxion · 03/08/2023 20:50

Food inflation is still at over 17%, and I presume that's the average, because a lot of stuff has gone up far more than that.

StarDolphins · 03/08/2023 21:06

CandyflossKaren · 03/08/2023 17:08

I'm pretty sure we're in a recession

Those were your words in your post OP

Now you are saying it's 'round the corner'

Make your mind up! It sounds like you don't really know what you're talking about and just like the sound of it in a post on mumsnet..

Stop being so mean & picky, goodness me, there’s really no need to be picking through someone’s wording. Telling someone they don’t know what they’re talking about. It doesn’t matter if she thinks it’s now or coming soon. It’s a forum to discuss thoughts, not an official interrogation.

Clavinova · 03/08/2023 21:18

edwinbear
@ Clavinova company insolvencies are also at the highest level since 2009

I was replying to the link on mortgage repossessions - I wasn't asked to look at company insolvencies. Sounds slightly less bad than the headline comparison here (re rate of insolvency and compulsory liquidations):

While insolvency numbers between Q3 2022 and Q2 2023 were higher than ten years before, the rate of insolvency per 10,000 companies was lower, because the number of companies on the Companies House register has increased during this time.

The number of compulsory liquidations in Q2 2023 was slightly lower than pre-pandemic levels.

CandyflossKaren · 03/08/2023 21:22

@StarDolphins nah you don't get to tell me to 'stop' anything

Soz

Willmafrockfit · 03/08/2023 21:24

why would you not buy a house now?
it wont be easier in the future?

StarDolphins · 03/08/2023 21:28

CandyflossKaren · 03/08/2023 21:22

@StarDolphins nah you don't get to tell me to 'stop' anything

Soz

Same as you don’t get to tell op to ‘make her mind up’

But…Nah & soz? Happy 9th birthday🤣

Awwlookatmybabyspider · 03/08/2023 21:28

CandyflossKaren · 03/08/2023 15:15

Recession because Wilkos is closing 😂

In what world is people losing their jobs anything to 😂 about.

Dymaxion · 03/08/2023 21:29

why would you not buy a house now?
it wont be easier in the future?

Why won't it be easier when interest rates have settled and the economy is on a more stable footing ? Do you think interest rates won't settle down a bit in the future, I am certain they won't go back to the historic lows of recent times, but they should plateau ?

Willmafrockfit · 03/08/2023 21:31

i always remember an accountant saying to me, when we didnt buy a house after all, she was fairly confident that prices would come down.
nope,
they never did

tootallfortheshelf · 03/08/2023 21:34

Dymaxion · 03/08/2023 21:29

why would you not buy a house now?
it wont be easier in the future?

Why won't it be easier when interest rates have settled and the economy is on a more stable footing ? Do you think interest rates won't settle down a bit in the future, I am certain they won't go back to the historic lows of recent times, but they should plateau ?

afaik 5% is around the average/normal cost of money?

Clarabe1 · 03/08/2023 21:39

We are not in recession. What is actually happening is closer to the norm in economic terms. Borrowing has being ridiculously cheap for the last couple of decades, hence it encourages a spending mentality. The era of cheap money is over for now. Interest rates will put the brakes on that and it will have a knock on effect on the value of houses. Bad news for recent buyers, good news for future borrowers.
Shops are shutting because we have changed the way we shop- it’s not just the economy. It’s people shopping online, rents rising etc etc.

Yarsvi · 03/08/2023 21:46

I am not a finance expert, so no need for anyone to point it out.
I feel that this country is becoming poorer. Just look around at the closed shops, lack of doctors, dentists and school teachers. Food, housing and cars are ridiculously expensive but I see many people eating out and driving very expensive cars. Some can afford it if course but perhaps young people can afford to do this because they are still living with their parents in their twenties and beyond.
The expensive cars amaze me. I am comfortably off and would never take on PCP or spend a fortune on such a vehicle. I drive a 10 year old car. I feel as interest rates rise, we will see a crash in the car market just as we previously did with mortgages.

Dymaxion · 03/08/2023 21:49

afaik 5% is around the average/normal cost of money?

But mortgage deals are around the 6-7% at the moment, thats what I meant about it settling down, being somewhere around the 4-5% mark. Tough for people who borrowed during the decade or so of very cheap debt, who believed it would continue. Also house prices are dropping slightly so if I was buying now I would be tempted to wait it out just a little longer, that rise in interest rate is going to increase any deposit I have for a start, plus I wouldn't want to fix too high or pay too much.

Zipps · 03/08/2023 21:54

No recession. There's always something and people love to panic. I'm not surprised that some businesses are closing. A lot of them have not got a clue how to run/ what people want etc. We went in a cafe the other day nothing but two cakes and a few Ice lollies but lots of customers in and at a popular location. They'd run out of one drink we ask for - Clueless. Wilko has been shit for ages, never got paint that you want etc. Terrible for the staff though.

Kazzyhoward · 04/08/2023 07:17

@Fizbosshoes

There's a new Turkish barber opening soon though. (I'm not convinced we need another barbers)

They're seldom "Turkish" and are usually money laundering/drug dealing run by the Albanian Mafia apparently. Nothing to do with having your hair cut at all - that's why there's usually a few dodgy looking blokes in their just chatting and rarely any customers.

Kazzyhoward · 04/08/2023 07:25

@Yarsvi

The expensive cars amaze me. I am comfortably off and would never take on PCP or spend a fortune on such a vehicle. I drive a 10 year old car. I feel as interest rates rise, we will see a crash in the car market just as we previously did with mortgages.

With the forthcoming ban on new petrol/diesel cars, I can't see a crash in the car market at all. Quite the contrary, like what happened during covid and with the chip factory fire, values of second hand cars are likely to increase in the next few years as all those for whom electric cars won't work, will buy used petrol/diesel instead.

A few years ago, economists were seriously worried about car finance, believing that used car prices would plummet leaving the finance firms with loads of cars (handed back at end of term), being worth less than planned, thus forcing some firms to go under and the backers (banks etc) with unrecoverable debts. It was a really big thing at the time, but just never happened.

The thing with vehicle leasing is that you're stuck once you're in that pattern. You have to hand your car back after 3 years or buy it at market price. If you don't have "market price" in savings, you're only choice is to get another 3 year lease. That means a lot of people who can't really afford to constantly lease new cars don't actually have any choice but to keep doing it. They're also brainwashed into thinking any car over 3 years old is costing to cost them thousands in repairs and constantly break down so don't want to get a normal loan to actually buy a used car as they've been conditioned to think that only brand new cars are reliable! (Of course, there's also the vanity aspect of always having a new car for bragging rights!).

Kazzyhoward · 04/08/2023 07:33

Zipps · 03/08/2023 21:54

No recession. There's always something and people love to panic. I'm not surprised that some businesses are closing. A lot of them have not got a clue how to run/ what people want etc. We went in a cafe the other day nothing but two cakes and a few Ice lollies but lots of customers in and at a popular location. They'd run out of one drink we ask for - Clueless. Wilko has been shit for ages, never got paint that you want etc. Terrible for the staff though.

Not sure why everyone thinks they're an expert at running a small business, especially cafes. You say "lots of customers" - that's exactly why they ran out of cakes! Cakes don't last for ever, there'll have been lots of days when there weren't "lots" of customers and they had to chuck out loads of cakes that didn't sell, eroding or zeroising their profits (ie owner's wage) for that day. With perishables, it's always a balancing act. You can't just bake another batch if a coach load of day trippers appear! Same with ice lollies etc - you can only stock a freezer load - on a hot day, it's quite possible that you'll sell the whole lot, and then you have to wait for the next delivery - you can't order "extra" if you've not got anywhere else to freeze it! So, it's all down to wastage costs and storage space/facilities. Cafes are probably one of the worst businesses for ebbs and flows of customers that you simply can't predict, so the owners have to work on what an "average" day looks like, and can't possibly hope to cover every eventuality. People would soon complain if their cake wasn't fresh or if it was clearly something pre-frozen and defrosted.

lastminutewednesday · 04/08/2023 07:43

I think it will really hit from next January or thereabouts. Mortgage time bombs, winter fuel prices. Unless something miraculous happens.

Kazzyhoward · 04/08/2023 07:51

lastminutewednesday · 04/08/2023 07:43

I think it will really hit from next January or thereabouts. Mortgage time bombs, winter fuel prices. Unless something miraculous happens.

Sadly nothing miraculous is going to happen. We are where we are, and prices will never come down. Inflation may be falling, but that's the rate of increase, you need negative inflation (deflation) for prices to fall. Yes, we may see modest falls in power costs, but certainly not to as low as they were a few years ago. Same with interest rates - they'll fall after they've peaked, but again, not to recent ultra low levels. Food prices will never fall - they'll just not rise as fast as they have in the last year or two.

Where we are now is pretty much a new "normal" for the next few years. We're not in recession because a lot of people aren't feeling the pinch. Most homeowners don't have mortgages. People on benefits (unemployed and state pensions) got inflation busting rises. There's a lot of people with plenty of savings and high incomes, easily able to weather the cost increases without much, if any, fall in lifestyles.

The cost of living crisis isn't affecting everyone equally. It's affecting, mostly, younger workers, who are the ones more likely to have mortgages, more likely to have been in recent years with NIC rises/student loans/tax threshold freezes/workplace pension deductions, etc., higher childcare costs, higher food prices, higher transport costs, etc. That's the real tragedy, that the burden isn't being spread evenly/equally across all sectors of the population.

Alltheusernamesaretakennow · 04/08/2023 08:07

Kazzyhoward · 04/08/2023 07:25

@Yarsvi

The expensive cars amaze me. I am comfortably off and would never take on PCP or spend a fortune on such a vehicle. I drive a 10 year old car. I feel as interest rates rise, we will see a crash in the car market just as we previously did with mortgages.

With the forthcoming ban on new petrol/diesel cars, I can't see a crash in the car market at all. Quite the contrary, like what happened during covid and with the chip factory fire, values of second hand cars are likely to increase in the next few years as all those for whom electric cars won't work, will buy used petrol/diesel instead.

A few years ago, economists were seriously worried about car finance, believing that used car prices would plummet leaving the finance firms with loads of cars (handed back at end of term), being worth less than planned, thus forcing some firms to go under and the backers (banks etc) with unrecoverable debts. It was a really big thing at the time, but just never happened.

The thing with vehicle leasing is that you're stuck once you're in that pattern. You have to hand your car back after 3 years or buy it at market price. If you don't have "market price" in savings, you're only choice is to get another 3 year lease. That means a lot of people who can't really afford to constantly lease new cars don't actually have any choice but to keep doing it. They're also brainwashed into thinking any car over 3 years old is costing to cost them thousands in repairs and constantly break down so don't want to get a normal loan to actually buy a used car as they've been conditioned to think that only brand new cars are reliable! (Of course, there's also the vanity aspect of always having a new car for bragging rights!).

Very true - when I'm driving my old car (13 years old) I always notice who has broken down at the side of the road, or on a breakdown truck... rarely old bangers like mine!

I work with people with cars on PCP deals, and some of them are close to retiring - I suppose that will change their mindset about having a shiny new car.

Zipps · 04/08/2023 09:30

Kazzyhoward · 04/08/2023 07:33

Not sure why everyone thinks they're an expert at running a small business, especially cafes. You say "lots of customers" - that's exactly why they ran out of cakes! Cakes don't last for ever, there'll have been lots of days when there weren't "lots" of customers and they had to chuck out loads of cakes that didn't sell, eroding or zeroising their profits (ie owner's wage) for that day. With perishables, it's always a balancing act. You can't just bake another batch if a coach load of day trippers appear! Same with ice lollies etc - you can only stock a freezer load - on a hot day, it's quite possible that you'll sell the whole lot, and then you have to wait for the next delivery - you can't order "extra" if you've not got anywhere else to freeze it! So, it's all down to wastage costs and storage space/facilities. Cafes are probably one of the worst businesses for ebbs and flows of customers that you simply can't predict, so the owners have to work on what an "average" day looks like, and can't possibly hope to cover every eventuality. People would soon complain if their cake wasn't fresh or if it was clearly something pre-frozen and defrosted.

Lol the owner wouldn't have a profit to erode. A busy business expects to factor in 10% waste. I studied and worked in finance in hospitality for many years. They run out of cakes at 11.55 that is truly bad organisation, the drink they ran out of comes in a jar and the massive freezer with half a dozen lollies in nothing like magnums or tubs- ridiculous.

AlltheFs · 04/08/2023 11:19

I barely felt that last official recession, had no impact on me at all, right now whilst it’s not officially in one I am feeling every bit of the fucked economy.

I think we will get away with not being in an actual recession but that doesn’t mean things are ok at all.

It does feel a bit end of days but it will all bounce back right enough. I think we have another 3 shitty years. And no change of government will make the slightest bit of difference in the short term - you need 2 terms for that.