To think a recession is looming?

[GrannyBloomers]

I was quoted £2 a litre for heating oil. £1000 for 500 litres, a matter of weeks ago it was roughly a quarter of the price.

Energy bills set to be £3k per annum - potentially more when a new price cap comes in in October.

Diesel near me is 171p and rising.

I'm in a 3 bed semi, nothing special. I need at least 1500 litres of oil a year (it runs the hot water too). That's say £3k. No gas but electric. I'm doing ok with cutting use = £1.5k per annum.

That's 4.5k at todays prices for household power. What will it be in October - 6k, 9k more?

This is before other costs increase - food will go up when the cost of storing it (refridgeration etc uses energy) and transport also increase.

If all the average person's income is spent on rent/mortgage/ bills and energy, then there's no money to spend on anything else. No eating out, no leisure, no holidays.

Surely a huge recession will follow.

And what if a much higher proportion of people need benefits?

What is a likely real-world increase in different living costs, what does modelling predict?

Like food costs - what is a realistic prediction for how much they could rise?

What will happen if food bank donations dry up

We don't live in the UK and food prices here are much higher to begin with, but lots of food items have risen about 10% in last six months-ish.

How much is jobseeker's allowance in the UK now? How are people relying on that going to absorb rising costs?

I'm a teacher driving 65 miles a day. My pay has been frozen for the last 18 months. Yay.

@AbsentmindedWoman

JSA 77 a week five or take a few pence

I don't know enough about economics to know if a recession is on the way. I know the cost of living will break people especially next winter.

It's been a rough few years and looks like it's going to be another few tough ones.

Recessions always end eventually. Even the 2008 recession ended eventually.

@crackofdoom uses the thread to tell everyone how much better she than everyone else and how she knows for certain they’ve all been living beyond their means. #howwouldyouknow

@autumnwater My love there never seems to be a good time to have a baby good luck. x

@lightisnotwhite

Unfortunately what most people don't seem to understand is that the private rental sector is crucial. Councils are desperate for private landlords to accept social housing tenants - including refugees - because they dont have enough houses to house them. These people will never be buying houses, regardless of how cheap they are.

It’s seeing property as an investment rather than a home that’s caused the shortage. It’s hard to get a mortgage currently because of massive deposit on over priced housing. renting ( which you have to do in order to have a roof over your head) is ( literally)extortionate.
If landlords crash and burn then it frees the market for first time buyers which in turn suppresses the market for renters as they leave.

Anyway. It’s coming quickly. Normally it is the better off who get stung in a recession with house prices falling. It’s the basics this time round. Ironically Covid means the richer section of society have more money accumulated over Covid.
I think it’s very worrying. Business can’t sustain £2 a litre fuel prices, gas, electric rises and a decline in customer spending power.

I agree with a lot of what you say. My partner's friend rents his house for over three times the cost of my mortgage. I almost can't comprehend that difference, its bonkers. And the initial deposit is the only stumbling block for them.

The difference between us is they chose to spend their money on a wedding and have since struggled to save that amount again for a mortgage, because of the high rental costs. I bought my first house on my own with a deposit I'd scraped together through saving and inheritance from multiple family members. Unlike my friends, I didn't go out clubbing and drinking every week and I didn't go travelling. But I was very lucky with the window I bought in - a few months later and I'd have been priced out (...and we're still not married nearly six years and one child down the line! )

I'm not saying any of us are right or wrong, just that our decisions have affected us differently.

I'm aware a lot of people turn to property as an investment because you simply can't get returns like that in any other investment. That's not their fault, most are saving for their retirement exactly as we are, just in a different way. They are also - in most cases - supplying a vital service to their communities. Like it or not, property is a commodity and, just like everything else, people with money will invest in commodities.

Doesn't make it fair and this can, of course, make it difficult for first time buyers - I was one of them.

But mortgage lenders aren't just affected by house prices. Criteria initially cracked down because many lenders had irresponsibly sold mortgages/additional borrowing and more recently due to the uncertainties of employment brought about by Covid - with many even vetting their customers to find out who had been eligible for furlough.

Yes, affordability is definitely linked to house prices. But I couldn't afford to buy a house in London so I didn't, I bought outside and had a long commute to work. I also saw many cheaper houses that I could have bought that were awful and more expensive ones with more bedrooms that I couldn't afford. So I didn't buy those. I bought something I could afford that was a foot on the ladder, not as big as I wanted and not with as many shiny things as I wanted or in the area where I was born and grew up and where my remaining family still was. And I had to compromise for a long time on my lifestyle. Not everyone has these options, but a lot do and choose not to take them.

I am going to be optimistic.

The gov has to step in.

Our society has been crippled by covid and covid problems.

We will be hit in the short term by rising prices, but we will benefit from loosening the covid reins.

If the "war" however drags on, there will be problems, and if covid mutates and hosptial cases rise again, we are buggered.

But I do think after years of suppresion we will see through this as long as the above does not happen.

@LimaCharlieHotelPapa

The difference between us is they chose to spend their money on a wedding and have since struggled to save that amount again for a mortgage, because of the high rental costs. I bought my first house on my own with a deposit I'd scraped together through saving and inheritance from multiple family members. Unlike my friends, I didn't go out clubbing and drinking every week and I didn't go travelling.

Did they all have multiple inheritances?

And now, I have heard it all.

Property is now a "commodity".

Would you like some oil with that?

The gov has to step in.

And do what?

I don't think people are revelling in it but being realistic as it is a triple whammy. Covid, war and climate change are all going to impact our lives and not in a positive way, unfortunately. It is already happening, isn't it? I would be absolutely delighted if proven to be wrong.

Yup think the main "difference " there is multiple family inheritences..

@BambinaJAS

And now, I have heard it all.

Property is now a "commodity".

Would you like some oil with that?

This is the first time you've heard of people treating property as a commodity?

The latest Office for National Statistics have just been released, growth of 0.8% which was higher than expected. The ONS guy interviewed on R4 said the economy is roughly back to pre-pandemic levels.

🎤 drop from @BrightYellowDaffodil
As you were, panic over

@BrightYellowDaffodil

The latest Office for National Statistics have just been released, growth of 0.8% which was higher than expected. The ONS guy interviewed on R4 said the economy is roughly back to pre-pandemic levels.

That's great news! So no recession then?

@Bringsexyback

Thank god for that! Here we were thinking that rising fuel, shelter and food prices would make this a very difficult few years, especially for middle and low income earners but.. GDP growth of 0.8%! Woohoo! Fun times are back again. Time to book that Lamborghini.

@BrightYellowDaffodil

The latest Office for National Statistics have just been released, growth of 0.8% which was higher than expected. The ONS guy interviewed on R4 said the economy is roughly back to pre-pandemic levels.

Sure, but going forward we are heading into recession. Everyone I know is cutting back on non essential spending. You would have to prize my gym membership out of my cold, dead hands, but I’ve cancelled Netflix, Spotify, meals and coffees out, cinema, takeaways, life insurance I don’t really need… none of those businesses will get my cash any more because what would have been spent will be going to the energy company and on other essentials like food.

@BrightYellowDaffodil

The latest Office for National Statistics have just been released, growth of 0.8% which was higher than expected. The ONS guy interviewed on R4 said the economy is roughly back to pre-pandemic levels.

Yes but the war in Ukraine has changed things considerably. Fuel prices were rising already but the market for fuel is often volatile but sometimes settles after a while The war will take it to a new level and sustained fuel price rises like this can't really lead to anything but a recession

Forget a recession, we are heading for depression.
Well done for feeding little ones and managing ridiculous bills. We did a plague - we got this 💪🏼

@MrsCocochannel

I've lived through 2 recessions and my husband has a degree in economics and works in property sector he has no mentioned it and I remember in 2008 he wrnt on about it for 6 months before it happened

I thought the recession in 2008 was driven by the behaviour of the property and financial markets over the previous years which was enabled by financial deregulation so perhaps your husband saw it coming earlier as he works in the sector .

As I understand it the pandemic and war in Europe is what is now driving the potential for another financial crash. I'd be so happy to be proved wrong but I do think a recession is coming and a bad one

Evidence to the contrary: economy is growing, not contracting (where the definition of a recession is when there’s two consecutive quarters of negative growth and NOT “I’m a bit worried about my finances”).

Naysayers: No!!!! WE’RE DOOOOOOMED!!!!!

The mental gymnastics of those who want to cling onto the doom and gloom is quite something to behold. Are people missing Covid so much that they’ve got to find something else with which to drag everyone else down to their miserable level?

Sure, but going forward we are heading into recession. Everyone I know is cutting back on non essential spending.

That’s not what defines a recession. There is so many more facets to the economy than whether you’ve cancelled Netflix.

Yes but the war in Ukraine has changed things considerably. Fuel prices were rising already but the market for fuel is often volatile but sometimes settles after a while
The war will take it to a new level and sustained fuel price rises like this can't really lead to anything but a recession

Fuel wholesale prices have already dropped considerably and last I checked the war was still ongoing.

We won’t see another 2008 style crash. That would be a political nightmare. Instead, what you’ll see is the exact same impact, if not worse, dragged out over the next 2 years: ”Official” inflation gauge reading 5% but households seeing real inflation of 10-15%, stagnant incomes, rising interest rates (most bets are on BoE rate of 2% by 2024) and stealth austerity (no one will announce the cuts to education, health budgets etc) as governments need to show cost cutting to be able to attract further bond investment.