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?

Stagnant incomes are you freaking kidding me ? If people haven’t had a 7% pay rise this year you need to go and look for another job, if I don’t get another 7% in April I will leave and get another job at a 25% increase, id highly recommend other people do the same.

If your morgaged to the hilt with no wriggle room your in trouble. Go to the bank and see if you can get some advice or extension on years to bring payments down. Giving up and selling or losing your home, a nightmare

@BrightYellowDaffodil

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.

Yes! Thank you! Laughed out loud at “There is so many more facets to the economy than whether you’ve cancelled Netflix.”

Thank you @BrightYellowDaffodil. They call economics the dismal science but we’re much less dismal than most of the posters on this thread!

@FudgeSundae It should say “There are so many more facets…” My incredulity at some of the drama llama-ing on this thread has addled my grammar

"Stagnant incomes are you freaking kidding me ? If people haven’t had a 7% pay rise this year you need to go and look for another job, if I don’t get another 7% in April I will leave and get another job at a 25% increase, id highly recommend other people do the same."

Hadn't thought of that. Hey, if everyone working today does that, we'll all be 25% richer overnight!

The latest Office for National Statistics have just been released, growth of 0.8% which was higher than expected.

which is good but most economists are not predicting boom times &

[quote lorking]@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? [/quote]
No. Their family is still alive and able to watch them and their children grow up and be an active part of their lives.

Most of my family didn't live to see me graduate, get a promotion, buy a house, find a good partner, have a child etc.

I had no family left by the time I was 34 and many had gone long before that, so if you're approaching this from the angle of who is luckier and which scenario is better you might want to reconsider. And in terms of what that inheritance amounted to, it was £10k, so not exactly mansion money (and yes, fully aware that is more than a lot of people have).

My point is some will never be able to buy regardless of what the housing market does, some are 'luckier' in life than others and some make different decisions that affect that luck if and when it comes around.

For those who don't have inheritances or savings or high paying jobs there are still ways for a lot of them. But if there aren't sufficient influxes of money for a deposit then that's often where private landlords come in, because like it or not councils cannot cope with the number of people on low or no incomes they have to house, they just don't have the availability. You remove them from the market and the odd young couple might be able to buy their first house, but there's a much larger group of people who will be impacted.

@LimaCharlieHotelPapa you misunderstood. I was specifically referring to the point you made about friends going out clubbing etc whilst you bought with help from inheritance.

I had help to buy too, no amount of not going out would have allowed me to save fast enough the help I had.

I had no family left by the time I was 34 and many had gone long before that, so if you're approaching this from the angle of who is luckier and which scenario is better you might want to reconsider.

You were unlucky to lose family young but were lucky to get inheritance. Plenty lose family young & don't receive anything so I'm not sure what I should reconsider?

Funny that no one has mentioned Brexshit as having a huge negative impact too

@Jansobieski

Funny that no one has mentioned Brexshit as having a huge negative impact too

No point in stating the bleedin’ obvious.

There might not be a recession in the economic sense. After all, rising energy prices, and rising commodity prices, are creating huge profits for part of the economy. So on average, there might be a small continous growth of GDP, as this will also include output of the defence industry, for example. But the situation of 'no official recession' will make the squeeze on low to middle income households even worse, as usually a recession goes together with price deflation, as did the 2008 recession, while what we are seeing is inflation, especially in the area of necessities, including housing. Higher interest rates also means government has significantly higher costs to serve debt, so very little room to increase spending on subsidies, public sector workers, tax cuts. So even if no actual recession, it'll be pretty shitty for many (most?) people.

And people talking about stealth austerity. It never stopped. Our local council (NW) has to make £37 millions in 'savings' this year, £30 millions odd last year. There is nothing left to cut.

@stripeyflowers

I think we need to face up it: we are going to endure the worse times have ever experienced in any of our lifetimes. Life will be immeasurably and inconceivably different from now on in. The year 2019 was our last and best year. There is no return to a preferred normal. Realism.

It feels exactly like this Who knew..

And people talking about stealth austerity. It never stopped.

yep

FFS 🤦‍♀️

@BambinaJAS

And now, I have heard it all.

Property is now a "commodity".

Would you like some oil with that?

Calm down.

I'm not saying for people like us it is. It is to the super rich, just like any other investment they would make or the 20 houses they'd own globally. There is very much an economic divide.

People paying £900, £1000, £1200, £1500 a rent per month and a savings account paying 10p? As a billionaire which one do you think they'd invest in?

which is good but most economists are not predicting boom times

So? We don't need the economy to be "booming", just nice and steady growth. In fact, booms are generally not a good thing overall.

I never said it was a good thing but another poster upthread somewhere referenced a boom which is what I was referring too. 🤷🏻‍♀️

Personally I don't see steady growth once the tax rises hit but I also don't see armageddon.

@Bringsexyback

Stagnant incomes are you freaking kidding me ? If people haven’t had a 7% pay rise this year you need to go and look for another job, if I don’t get another 7% in April I will leave and get another job at a 25% increase, id highly recommend other people do the same.

I got a 10% rise.

Financial professionals with specialties are doing well.

Companies are terrified of us jumping ship for 20% or more.

Very difficult to replace specialised know how.

[quote ledbydonkeys]@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.[/quote]
You are conflating two different things.

A recession - which I will say again for the people at the back - is two consecutive quarters of negative growth. You can have an economy that is generally bumbling along quite nicely with overall growth but the occasional negative quarter. If two of those negative quarters are next to each other - say a drop of 0.1% for two quarters before picking back up again - technically you've had a recession. It's a term loaded with associations and assumptions that may well not tally with people's Amazon Prime subscriptions every day lives.

Then you have the cost of living which is undoubtedly a significant issue at the moment. There are lots of things that feed into it: Brexit; Covid (in terms of its effect on production and transport of materials, general supply chain problems, the stability/recovery of impacted industries, overall shifts in living/working patterns etc. etc.); the Russian/Ukrainian war; the general move away from fossil fuel usage meaning that 'dirty' energy production had been phased out and there not being a readily available alternative to expensive sources of energy; energy companies that were unstable or financially unsustainable and which have now collapsed at great cost; that we're used to cheap food and/or readily available credit and so on. Some of these things can be mitigated (such as turning coal-fired power stations back on again) and some will sort themselves out in the fullness of time, which will ease the severity, as will Government interventions which will undoubtedly come, not least because they have an eye to an election cycle which starts again in about 18 months time.

That there are some difficult times ahead for some, or indeed many, and that there will be belt-tightening is not something I disagree with, but I do not believe they will be as dire as predicted here or that circumstances automatically herald a recession.

Property is simply a real asset.

The reason people invest in it is because it provides a real return (over and above inflation) but is illiquid (cannot be disposed off quickly and is expensive to maintain).

Commodities like gold are not illiquid. You can go to a store and sell it quite easily.

Thats it. There really is nothing more special than that for the average "investor" in terms of property investments.

But there are limits for the smaller landlords. Pushing up rent also has limits because it depends on affordability. How much disposable income people have.

And the cost of living crisis will materially impact affordability. Raise rents too much and you will end up with an empty house.

Additionally, those landlords now needs to spend money to get their houses up to code in terms of energy efficiency. So, good luck with that one.

I deal with very large institutional property investors. Its a very different group with a different set of risks.

@Lockheart

House prices are still going through the roof too.

Something will have to give, but I hope we'll avoid a full recession.

This is changing. I wouldn't be buying now- price crash coming. If thinking of selling I'd get on with it pronto!

@ElliotGoss I think a sibling always limits weekday you can do with your older child but, in my experience, they are worth it overall. Mine is asking for another one now! Best of luck ☺️