When will this money crisis be over?

[Londonlade]

How long is a piece of string but realistically when are people thinking this financial crisis will be over?! Or is it the new normal?

They are predicting a 2 year (or 8 successive quarters) of recession.

So...that long?

So what does that mean after 2 years..things go down in price?! Or stay the same? What are people expecting regarding interest rates?

I think you’re asking people to get out a crystal ball.

I think you can say that interest rates aren’t going to fall as fast as they’ve gone up and probably won’t be going back to the historic lows we’ve seen recently.

Inflation return to normal (2%) within the next year or two but bear in mind that that's just the rate of increase slowing again. I was anticipating rates going up to 4.5 ish within the year then stabilising but BofE are saying that current levels and increase should see us through. I think rates have been too low for too long and this and QE have got us in a sticky mess.

Recession length is harder to predict but its not really expected to get better for a year to 18 months. 2 years seems bit extreme to my mind but we are seeing the wheels come off after brexit, covid and Ukraine have all hit us hard. Where is growth to come from?

In terms of prices I think we are at new normal. Possibly worsening due to ongoing energy crises on multiple fronts who has knock on effect into the cost of everything else as manufacturers and suppliers have to pay both increased utility and fuel costs.

The outlook isn't great but employment levels are high so its more of a diminution in standards of living that is a trend set to worsen without some serious intervention and a real change in the financialisation of everything which is bleeding those on low and middle incomes dry to the further enrichment of the very wealthy few.

I not thick but I don't understand what is going on. How can the price of good be soaring do high? Can there not be some sort of government intervention? It seems the price surges are much higher than the suggested cost of living increase.

3rd quarter of 2024 they are saying.

I'm not expecting prices to go down. It doesn't usually go that way.

Increased food prices (and other goods routinely imported from Europe) were a known side effect of Brexit. Plus the cost of labour increased in the UK as we didn't want the cheaper Eastern European labour any more. This was celebrated as more jobs for the British but sadly these aren't jobs people want and British producers now pay higher wages or let parts of their business go to the wall.

A massive cut in GDP was also a known impact of Brexit . We chose to put ourselves into a recession as this was short (decades) term pain for longer term gain. Reese mogg thought 50 years would make the benefit clear.

Currently nothing has been done to take advantage of the chance to deregulate and become Hong Kong or Singapore. The Tory Party are currently eating themselves so we can hang on to our sick pay, maternity leave, consumer rights , employment protection for a bit longer. Its not cricket though. How is anyone going to profiteer wildly if they cant grind down some worker bees in the process?

At least they can run down the NHS then sell it off to the highest bidder. Better get on with that before Labour get in.

Sorry rant....

We have to get through Hunt's budget which will both likely increase taxes and cut services. Then a 2 year recession where even people with secure jobs will lose their jobs. I think we have a very tough next 2-3 years. After that depends on how quickly we come out of recession. Oh, and throw in how long Putin keeps up illegal war against Ukraine.

Ukraine was a key exporter of many products, in particular wheat.
Many African countries are at risk of famine because of this.
It's very simple really supply is reduced, more people chasing it, prices go up

We have been overdue for a recession for quite some time just that now it appears there's lots of things contributing to it.

I think a case of cheap money for far too long and we got hooked on it

This is reality biting unfortunately 😔

BoE calling it the worse recession in 100 years - we are probably entering Great Depression 2. The Great Depression of the 1930s began with the stock-market crash of October 1929 and continued into the early 1940s, when World War II created the basis for new growth. That period included two separate economic drops: first from 1929 to 1933, and then again from May 1937 into 1938. As in the 1930s, we’re likely to see moments of expansion in this period of depression.

If we have the unwinding of massive debt in the western economies, the end of quantitative easing, the end of globalisation, climate change costs and mitigations and wars current and anticipated then most probably years. Once the genie is out of the bottle then these things take on a life of their own with unpredictable consequences and impacts.

The hope is central banks and government know a lot more than they did then and can work collectively to try and mitigate the damage somewhat. But it's looking like their two biggest tools QE and ultra-low interest rates are off the table having used them to death after the 2008 financial crisis.

The next bombs to look out for are banks going bust and sovereign debt default.

The government doesn’t set prices. The market does.

@ZenNudist That was extremely depressing reading and I don't even live in the UK (my family does though).

There are many articles online predicting another great depression lasting a decade or more. It's grim reading.

Unless they reverse brexit it is just going to get worse.

Maybe my when the next generation have kids there may be an improvement, but unlikely.

I think the days of when the UK was considered a rich and a global player are over.

We've got to get used to it.

I just see my shopping bill go up and up and up, and I do wonder if it will ever go down. It seems like a lot of stuff jumps up 20p a week.

I know the government doesnt set prices but how can prices go up so astronomically. It can't be supply a demand. Also intervention for utilities has been.given,we could decide not to.put heating in. We can't stop eating. The excessive profits should be curtailed. Don't tell me only thr extra cost has been passed onto the consumer,yes that and a bit more for good measure. I wonder if prices have soared so much around the rest of the world? Programme on radio 2 nxt week, think it supposed to give a basic guide to the economy,will bd listening. Can read in a foreign.language sort my own sh*t, but i am.stumped with this.😨🤣

What money crisis? The rich are getting richer than ever.

It’s here for a while. Couple of years. Imagine prices will keep slowly rising so it’s going to get worse before it gets better.

People are going to have to get used to a lesser quality of life. I mean this is the first generation really that have had luxuries as standard. Yes we think we ‘need’ them but we don’t. I listen to my parents and grandparents talk about what life was like when they were young and by comparison we seem very superficial and throw away. Before us it was always normal for food to be costly and to have to save up all year to purchase new items. The working classes definitely weren’t taking yearly foreign holidays (or any holidays) and life was generally harder. Houses didn’t even have central heating or often indoor bathrooms, people just had to wrap the kids up. My mum tells me how she used to be scraping ice off the inside of her bedroom window as a child. She’s now in her 60’s and survived. Obviously it’s shit and no one wants to live that way but realistically it’s not ‘a landslide into austerity’ as much as a reset to how things used to be. Everyone wants more, more benefits, more pay, more luxuries and better quality of lives but the country is on its arse financially. If anyone here thinks they can fix that then go into politics and do something about it, don’t sit on MN whinging and setting out unrealistic goals and setting the country to rights 😂

As a parent of two toddler one disabled I am gutted it reached this point, but as someone who studied economics I fully understand why it has. (Not defending the crap politicians but them aside the country was never going to financially survive covid well)

Yes if rich people payed more tax, if the country made £20 ph the minimum wage, IF IF IF IF… then we could all live in a communist utopia where everyone had everything but that’s just never ever going to happen so… be prepared.

What does that mean? Some people will always get richer but that doesn't mean there isn't a cost of living crisis for the majority. Are you saying there isn't?

Re food, my understanding is that prices were kept down for as long as possible but the pressures of higher energy costs feeds through the entire chain, from the fuel used on farms, the energy use in factories, transportation costs, then supermarket energy bills.

I think for the U.K. in particular a delicate interlinked economic chain has been severed leaving all the bits in pieces.

The rich are holding on and reinventing themselves (eg employees losing T&C’s) to increase profit, the govt is assisting and we the 80/90% are paying for that.

I don’t know how this can end. Maybe when/if huge wealth (and I don’t necessarily mean individuals) stops being hoarded.

There are a number of reasons for the increase. Demand for oil and gas is pushing up energy prices worldwide. This means higher bills for householders, and for businesses.
Shortages of many goods are causing supply problems and pushing up prices
Government support to businesses during the pandemic, like the Furlough scheme, has ended
Businesses are struggling to recruit lorry drivers and hospitality staff. This is partly due to the pandemic but hasn’t been helped by Brexit.

It really can be supply and demand. Lots of fertiliser is made in Russia. Pre the illegal war we were paying £280 a ton. Now you're looking around £900 a ton and that's if you can make the stuff. Its Putin retaliating to the sanctions. We buy 80 odd ton of fert each year to grow crops. It's tripled. That is just one tiny element of the cost of growing food. Our electric bill has quadrupled. (To be fair the price cap did bring this down a bit).

On Monday this week when he froze the wheat corridor agreement wheat shot up by £20 a ton. Pre war it was £190 a ton. Now it's £260. On Wednesday when the corridor reopened it went down again by £20. The world isn't short of wheat. The markets are pricing in the volatility. Shippers are struggling to get insurance to for the vessels leaving Ukraine.

Red diesel for our tractors has almost doubled. Wages are going up. That's if you can get the staff.

I don't think much of the food price increases are due to Brexit. It's putin. Possibly machinery parts but it's not the import costs that are the killer - it's the raw materials to make them. And they don't come from Europe.

It really is about supply and demand.

If it’s just a recession - 2025

if it’s a depression - see you next decade.