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?

@user1497207191 Well, food and power aren't going to go up so much are they. They may, worst case, double

I don't think you realise how many people are already struggling, and how much they are struggling.

Thank you everyone for your advice we are doing to look at the rates now.

@WisherWood

Employment is at an all time high, wages are rising fast.

And which planet do you inhabit? Zero hour contracts and self-employment keep people out of unemployment stats but they don't give people the kind of security that enables them to spend money. And real wages are not rising www.economicsobservatory.com/what-is-happening-with-UK-wages

Although out of interest, how much did you get paid to write that bollocks?

I agree. Boris made a big thing about saying record numbers were in employment, but those figures don't include all the freelancers/self employed who stopped during the pandemic, the number of whom is far higher than the much smaller "increase" in those employed. Basically, fewer people are economically active.

[quote JesusInTheCabbageVan]**@user1497207191* Well, food and power aren't going to go up so much are they. They may, worst case, double*

I don't think you realise how many people are already struggling, and how much they are struggling.[/quote]
We're talking about buying houses, so those really struggling won't be able to save for the deposit anyway. I'm talking about those who are currently paying rent and/or saving what will need to be a significant amount for the deposit and other costs of buying a house.

I definitely feel the tide is turning!

Anecdotally, I was with friends at the weekend, bunch of people late 20s/early 30s most of us child free. We've all got reasonable jobs and own our own houses - and we unanimously decided to meet at someone's house for drinks instead of going out for dinner and a night out like we usually would.

Everyone I know is feeling the pinch at the minute. I work in community health services which involves a lot of driving so really wincing at the price of fuel. Feel like my money goes nowhere on the food shop and by the time bills mortgage and essentials are paid for there's not much left! And to add insult to j jury DHs job looks set to make him redundant this year as he's an engineer in an industry that were hit very hard by covid. Rather miserable existence just going to work and not being able to save for any fun I know that's a first world problem though and feel terrible complaining with what is happening elsewhere in the world.

For the first time in my life I'm anxious about money and where the situation will take us but for now sadly we're tightening our belts. No further big work on our house for now (thankfully it's in a reasonable condition!), no holidays any time soon and no pointless spending on dinners end trips out to the theatre - my fave treat usually.

House prices can’t stay at the level they are. People are being forced out of the rental market. When the recession hits there will be a big drop in the housing market and there will be a price correction. My house has nearly doubled in value since I moved into it 6 years ago. I know this because I’ve seen what houses identical to mine are going for. This is not sustainable and the bubble will burst. It’s only a matter of time.

Those who are renting have suffered too because the landlords will have been putting up their rents to cover their costs but there will come a point when people don’t have enough to cover all their expenses - including rental payments. The rental prices in my area are particularly high due to Covid and people from cities moving to rural towns like mine (some of them buying second homes 🙄). Rents have gone up by almost 60% in some cases over the last few years alone. It’s crazy.

@user1497207191 granted, FTBs who are reasonably well-off and have already managed to save upwards of 20k will be in a great position. That's a relatively small proportion of young people though, overall.

I work in a vets, since end of last year we have been crazy busy. The last few weeks though have seen a real drop in footfall. We were just saying yesterday that it was probably people making a choice between filling up the car and taking their cat to the vet. It’s been really noticeable and this is usually the point at which things start getting busy,
On a personal note we need heating oil soon and I’m scared to even get a quote !

@Orangelover

Anecdotally, I was with friends at the weekend, bunch of people late 20s/early 30s most of us child free. We've all got reasonable jobs and own our own houses - and we unanimously decided to meet at someone's house for drinks instead of going out for dinner and a night out like we usually would.

Funnily enough I was with my son yesterday. He's a Uni student and was saying that a couple of his flat mates had decided not to go out for meal for their birthdays and to get takeaways instead. (The 8 of them usually go out into town to a restaurant for their birthdays). So even Uni students are aware of rising prices and tightening their belts!

Also self employed and we've seen a definite drop off in enquiries. I am sure people are more worried about finances. At the same time out costs (petrol for travelling to clients) have gone up significantly and because we are not a limited company we can't claim travel as an expense. There are paid jobs available locally but they are all cleaning type jobs. At 54 with health issues I simply can't do anything too physical for too many hours.

@balalake

I think there will be a recession, but which sectors of the economy may be affected is difficult to predict. After two years where some activities have been limited, which ones people choose to do less of or none may not be the usual response to a recession.

This is a good point. It's clear that lots of people are going to really struggle and be choosing between food and heat etc, less clear what people who will still have disposable income are going to choose to tighten their belts on and where they'll still splurge.

I don't think the housing bubble will burst, government will most likely concentrate their efforts to keep it up. I wish there would be more control over holiday lets. We're having to look for a new rental place end of this year but every property gets snapped up immediately. I'm worried we'll have to move out of the area, children having to leave their schools and friends. I never thought it would be this bad, there were always so many rental properties available round here, most people were renting only for awhile until they were able to buy. Now people are staying longer in their rentals and there's also less stock as some landlords are doing holiday lettings instead as it's more money for them.

@WisherWood

Employment is at an all time high, wages are rising fast.

And which planet do you inhabit? Zero hour contracts and self-employment keep people out of unemployment stats but they don't give people the kind of security that enables them to spend money. And real wages are not rising www.economicsobservatory.com/what-is-happening-with-UK-wages

Although out of interest, how much did you get paid to write that bollocks?

From your link: “ The most recent data suggest that earnings are increasing by around 4% annually – below the current rate of consumer price index (CPI) inflation. This indicates that real wages (which takes inflation into account) are falling, as people’s pay is growing more slowly than prices are increasing.” Which is exactly what I said.

Did you mean to be so rude? I work in a financial industry and instead of jumping on the panic train I thought I would provide an alternative viewpoint in line with what most economists are saying. (And why would anyone pay me for this?)

"Sunak is now a wartime chancellor"

digitaleditions.telegraph.co.uk/data/903/reader/reader.html?#!preferred/0/package/903/pub/903/page/98/article/285046

@Obira

Going against the grain here but… no, we’re not heading for recession. If anything, we’re heading for a massive boom with inflation going up significantly You really think there’ll be a boom? I was devastated because the coming recession will prevent me quitting my crappy job and starting a business (material costs rising plus nobody will be able to afford my products). I would be thrilled if there was a boom instead.

Yes, in terms of I think inflation and productivity will keep rising. That might not help you, as it might mean materials still go up and wages will have to rise sharply to increase in real terms (and won’t keep pace in the short term). So it might still suck, but it’s not a recession.

@QuebecBagnet

I think there’s going to be a massive recession. People will stop eating out, stop drinking down the pub, cut back on take aways, cancel gym memberships, stop getting their legs waxed. Anything they can do to save money which they need to divert to rising food, petrol and energy prices. Those types of businesses will go bust. More unemployment. Inflation is obviously increasing so at some point interest rates will go up. Bad news for those with mortgages and may well lead to a property crash. It’s going to be a bad few years.

This. Many business’s will go under, esp those who struggled in covid

I don’t know if house prices will go up, or will crash down so those who brought in last 2/4yrs will end up in negative equity

Mortgage interest rates will rise. They’ve bed. Low for so long

20yrs ago when I brought my house rates were 6/7%

I think they will go up to maybe 3/4%

Life is going to be tough and tight for all

@Whelmed

less stock as some landlords are doing holiday lettings instead as it's more money for them.

Those landlords who converted into holiday lettings pre covid are absolutely quids in due to Rishi's covid grants. There were no grants to landlords letting residential properties nor commercial properties, but there were typically grants of up to £28k per property for holiday lets as they were classed as businesses and were eligible for "additional restrictions" grants from local councils due to being unable to trade during the lockdowns/restrictions. I've got a client with 3 independent "holiday flats" in the same building (a barn conversion) - he got a total of £84k in covid grants - he'd have got zilch if they'd been residential lets, and he still was able to make money in the periods between lockdowns as he was fully booked - he ended up a lot better off because of covid than he'd have done had it not happened. Some of the covid support grants were absolutely crazy, lots of people got more than they needed, whilst lots of people got nothing.

@QuebecBagnet

I think it’s worse than 08-09 already. I think it will get worse than the 80s crash and recession.

I think it will be much worse.

In 2008 I was just starting work so didnt really notice much of a recession, I only just started earning.

But I think this will be a severe one that will make a much bigger impact.

I agree. I'm really worried

@Orangelover - we are doing this now also. Initially ours was driven by having small DC and therefore not being able to go out much anyway, and fact restaurants had started to be a bit disappointing and we could cook better at home, but now going to also be driven by the crisis and will extend to take out.

Going to be doing much more meal planning, batch cooking and economising.

Thankfully we bought a house with a large garden and so growing a lot of our own produce - DH planted 250 onion seeds yesterday

We're the same - our annual fuel bill is going up from £2,800 to £5k. On top of rising petrol and food costs, as well as high interest rates, we're having to cancel our first holiday in 3 years as we just can't afford it.

We also won't be going out much and will be buying cheap / second hand wherever possible so our 'consumer spend' will drop through the floor. I imagine many families are facing similar...

If I had a penny for every time someone has said “a recession is definitely going to happen” over the past 5 years I would have paid off my mortgage by now. I got told on here by so called “experts” three years ago I was wasting my money buying a house because “the house prices will crash and your house will be worth about half what you paid if not less”, it was complete bollocks. All that’s happened is house prices have gone up, I’m £250 a month better off than I was renting, and my equity has tripled in two years. Two of my friends didn’t buy a house because of this advice and prices have risen so much they can’t afford to buy anymore.

No one has a crystal ball, this is all conjecture and wishful thinking on some people’s behalf (thinking they will soon be able to buy a 250k house for 50k) and it’s stopping people living their lives.

Well the rigged housing market will be one of the things that has to give surely? People can't play that silly game when they're worried about food and fuel

I can't see how it will be sustained either, but the issue is house prices rising are the one thing that gives everyday people (or really older and middle class people) the illusion of having wealth, so it is likely this will be propped up until it really has to give. Even if I had a deposit now I wouldn't buy a house. There was an economist (Harrison, I think) that predicts the housing market moves through a 16-20 year cycle, so a crash is imminent according to that, however I don't think we really learnt from the last one and the peak seems to have come earlier this time, so it could be sooner.

@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?

I just presumed we all know a worldwide recession is coming, isn't that what loads of news articles are going on about?