To think we are heading towards a huge recession

[jnfrrss]

Homes and retail sales down 3% last month. Pay isn't keeping up with inflation. Backoffice staff are quickly being replaced with robots.

The last recession was only "saved" by printing billions to bail out the banks and this seems to have just caused a huge spike in assets like bonds and homes. None of the issues there have really been solved just delayed and they can't lower rates or stimulate like they did back in 07-08. The public debt has grown huge during the "austerity" times. Every day you hear of new job cuts and that's not to mention all the jobs that aren't replaced after normal attrition. Then there's brexit and the huge amount of people on interest only mortgages.

Or aibu and things are looking good?

Crunchy I hope the youngsters are becoming more aware and will be careful where they place their money - but past scandals are not reasons to NOT pay into a pension.

But it means that paying into a pension is a gamble.

Where did so many people get the idea that it was in any way feasible for them to retire and have probably 30+ years of economic activity and expect to have a comfortable living? That's totally unreasonable for 90% of people.

The problem is how can you pay into a pension pot when your renting and saving for a deposit? It’s not viable. Then if your renting your pension pot needs to be big enough to pay for rent in retirement.

In a way the worst thing the government did was stop the housing crash. Yes i completely get why they did it but we needed that adjustment.

Our economic growth is always a bit of a myth
A deck of cards built on rising house prices and domestic spending/debt

I've had the worst first quarter for 5 years in one of my businesses. The sole reason for this is the bad weather. This 2nd quarter is already looking like the best in 5 years so fingers crossed the weather holds.

I have 2 service businesses and haven't seen a slump in spending at all

Two of my friends are in dire financial straits and previously owned their own succesful businesses. They survived since 2008 but have subsequently gone out of business in the past year. One doesn’t own property and has always rented and one is probably going to lose their home. The people who say it has never affected them this time it probably will.

I’m sure there will be another recession in a few years under a conservative government. However, if labour win the next election the country will face bankruptcy. Hopefully, we won’t need the imf to bail us out this time!

crunchy, why do you wish you did not save for a pension?

Pensions are generally long term investments and (assuming it is a defined contribution, rather than final salary) the ups and downs of a stock market does not affect things unless you are close to retirement.

We hardly have any economic growth. Our manufacturig output is stalling and our productiviy is poor. Of course everyone is cautious at the moment. Who is going to be expanding when no-one knows what the supply chain will look like and whether jobs will go to Europe? Many companies are planning to leave if the Brexit terms do not work for them.

It wasn't a housing crash as such. It was a banking crisis. The banks were near collapse and of course had to be saved. Sit tight and negative equity usually disappears. It has in many areas. Housing prices are all about supply and demand. When money is readily available (pre banking crash), housing is more affordable, but people then get into difficulty repaying the mortgate when it goes up or they lose their job. When money is scarce for lending, prices stagnate, or fall, due to lack of demand.

In London there has been exceptional demand but this may reduce in the less desirable areas due to econmic migrants going back to their original homes. If the several hundred thousand French go back to France, London prices may go down because supply could outstrip demand. (See the thread elsewhere on Croydon house prices).

It is an ever changing picture but it could be a gamble to think your house is your pension in some areas. There may be little equity in it suitable for a pension . Therefore paying into a pension, which attracts tax relief, is a good idea.

The problem is how can you pay into a pension pot when your renting and saving for a deposit? It’s not viable.

That's right. Depending on your income and where you live you will have to decide whether to pay into a pension or save a deposit/mortgage. A lot of people will not be able to do both - the's the reality at the moment.

Also the earlier you pay into a pension the better the investment.

You have to save for a pension. Unless you want to make no plans for your later life in which case you will be working until you are 70. Companies raiding pension pots has been a problem but the law has been tightened up now to try and stop the Phillip Greens of this world.
Too late to affect those directly responsible for the financial crash. Not the worst thing in the world having to work an extra 3 years compared to what has happened to some. My main gripe is I suppose that the promise, “We are all in it together” was proved to be absolutely hollow. As Lady explained.

I’m worried that we are heading for one, hopefully I’m wrong but I feel like the state is broke.

At least some of the issue around pensions is that we look at retirement all wrong. Traditionally, retirement age was 65 when life expectancy was - what - 70 or something? (Don’t know exactly but probably somewhere around that).

So the average person might expect to spend 5-10 years retired.

Today we live until more like 80 on average (again not sure on exact figure) and yet still are fixated on the idea of retirement at 65.

If we looked at it the other way - looking at expected lifespan and then taking 5-10 years off to work out retirement age, we’d retire at maybe 70-75.

Appreciate this isn’t very palatable - and in lots of physical jobs not possible - but it would give us a better chance of being able to fund our retirement.

Half of the problem is that the concept of a pension was never designed to support you for potentially a quarter or so of your life.

We haven't been in a constant recession since 2009, as recession is two consecutive quarters of negative growth. We have had fairly poor growth since then, but not negative. Prior to the Brexit referendum, things had picked up a bit and we had the fastest growth in Europe. We have now dropped to the slowest rate of growth in Europe though, which is inevitably Brexit-related.

The trouble is, most of our economic growth over the past decade or so has been based on inward investment from China/the Middle East etc. If this dries up, particularly in property, we have nothing to fall back on. We don't produce much, most of our economy is based in financial services, which will be affected by a loss of passporting rights. Outside of the EU, we need see fundamental restructuring which I don't see any sign of.

crunchy I totally hear you on the pension thing

I only joined pensions when I was with companies who made it worthwhile - that certainly hasn't been all the places I worked.

about 6 years ago I decided no more, just regular savings. I am tighter than a gnat's arse and I just think it makes more sense.

also a lot of pension "what you need" type figures seem to be based on things we never do anyway - eat out, go on holiday. I just felt that the risks of pension rules changing were so high too.

I think if you can save, that's great, but many people will just put money in a pension due to the convention of it, whereas it might not be the right thing to do.