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?

I think things will improve slightly but generally it's the normal. We already have a tight labour market, social care & the NHS is crumbling & we have the looming issue of an ageing population. There just isn't the money to fund it all.

Plus we never really recovered from 08 & look what that did to salaries.

Two year recession. Afterwards, inflation will be under control but prices won't drop just stop rising at such an alarming rate. Long period of house price stagnation. Interest rates may begin to ease back but never back to 0-2% those days are gone. Wholesale energy costs will fall if/when the war ends but our bills won't drop as we're already underpaying, just that government won't have to subsidise.

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.

Not housing though, or wage growth luxuries.

It's going to be years.
The best thing people can do, to the extent they can afford to, is clear down debt to create greater financial resilience for what's coming down the line.
Overpay the mortgage, get rid of cars on lease deals, pay off credit and store cards.
And decrease other financial commitments - cancel the gym memberships, cancel subscription boxes, don't upgrade your phone next time it's offered.
Streamline your finances wherever possible.

OP, I think we’re in it for the long haul 😢 clear debts as much as possible. I think the housing market will suffer a sharp correction through to 2023/24.

For me, I’m looking at fuel bills and food shopping savings.

It’s going to be brutal for many families over the next 12-18 months.

Thanks flowery curtain for taking the time to explain. Much appreciated. 🙂

Ukraine and Russia are the biggest producers of animal feed and fertilizer. We were warned at the beginning of the war of the serious implications of this for the cost of food as everything costs more to produce. But because the effects take time to filter through it didn't get us immediately.

Throw in increased energy and wage costs for manufacturers as well, plus the increased covid debt we've all conveniently forgotten about and it's a perfect storm.

You can blame the Tories all you like but these are global issues. The interest rates are going up because of US policy. If it doesn't happen the pound is worth less and then everything we import costs more.

We can change the nature of support offered (some of that kicks the can further down the line. Doesn't mean it shouldn't happen, just that we need to be aware it comes at a cost) but Google price rises and then the name of any country and you'll see the issues. The BBC ran a piece last week about record numbers of people in Australia giving up pets because they can't afford to feed them.

The prices we see now are here to stay. Everything else will start to catch up but it's going to be a good few years sadly.

Jacob Rees-Mogg said we would start to see the benefits of Brexit in 50 years' time, but that was before Covid and Ukraine, so I'd say 60-70 years...

Maybe 5 years but I don't think we will return to pre Brexit economic stability unless we rejoin the EU. It's been a disaster. The energy crisis is one factor but underlying it the cost of goods was always going to go up if they have additional export duties on them.

Folks you’ve been duped into thinking that the Ukraine war caused this. That has a very small part to play in it.

Three things caused it. Covid. 14 years of money printing. And 25 years of productivity decline.

Since 2008 we have printed 1 trillion pounds. That’s a number with 12 zeroes.£1,000,000,000,000. That’s right our government printed money without producing any goods. Half of this printed to pay for Covid. When healthy people were locked up, given money like it was growing on trees. So the govt shut down he economy and gave away ‘free money’. People had money but k no it enough goods produces. That’s caused a supply and demand imbalance. That’s what caused the inflation we are seeing now.

If we go back 25 years, something started to happen that hollowed out our economy. Low wages subsidized by the taxpayer. When you subsidize low wages, employers have no incentive to pay the market rate or invest in increasing productivity through automation. It essentially props up unviable businesses making your economy weaker, instead of letting strong ones innovate and thrive. Our economy’s biggest issue is low productivity. At the same time, we were not investing skills. Instead churning out people from universities with media study degrees.

So we are a net importer, what little we do make is made unproductively with everyone on low wages being subsidized. At the same time we stopped making what little we were making totally for 2 years AND gave people yet more made up money.

This, folks, is a story of how to kill your own economy. Let’s all celebrate 25 years of my Labour and Tories.

@flowerycurtain you said "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."

Brexit is hugely to blame The shop that I am a shareholder in (a nice coop) has had huge price rises for food products from Europe, directly because of Brexit. The extra costs are many: Increased paperwork (a huge amount) for everything coming in from Europe as a result Many suppliers refused to carry on trading with UK businesses as it was so expensive and time-consuming (obviously also an expense). This means they have less choice of supplier, therefore less competition to bring down prices. The difficulties in transport as a result of the paperwork has increased travel costs hugely, especially for items that need to be refrigerated. Lorry drivers also are having to sleep/have breaks on journeys when they didn't before as it's taking so long and not legally allowed to drive. It's not just ready to sell items but also ingredients of products they buy that are made in the UK.
Brexit has also meant they have to do more paperwork themselves and for a single shop have had to employ someone just to deal with that.
They also are struggling to recruit as a fifth of their work force were EU based and several have returned. They have employed not as high a calibre of employee of late as less choice.
In the UK huge percentage of the seasonal workers were from the EU, farms etc struggling to recruit as well.
All these things cost money. All of which they have to pass on to the food prices. Brexit was a terrible idea economically.

New normal. It's a paradigm shift and the decline of the west. We are all going to get much poorer over the coming decades.

I don’t think this is true. My mum and all her friends/family grew up in two up two down terraces with mould, cockroaches and damp, no central heating or indoor bathrooms.

My dad and his siblings grew up in ‘lodgings’ one room in someone else’s house for all 6 of them. This was super common at that time. My grandparents also largely grew up in ‘lodgings’. It was certainly very normal in the North.

The expectation of single family, ample space, good conditions, affordable housing was very much created in the 80/90’s and has grown from there. By the standards of the 40’s/50’s temporary B&B accommodation would have been perfectly acceptable and wouldn’t have been funded by the government in most cases, people went to what they could afford. Although a nice idea it wasn’t really sustainable given the other economic factors at play (foreign investment, tax rates, people not wanting to live in places where land is actually in good supply…etc)

Things cost what they cost. Manufacturing costs will have increased due to energy price rises. Some foods are scarce and harder to get hold of due to the war in Ukraine. Fewer people to pick crops in some countries. Things get more expensive and there's a limit to how much governments can intervene.

Apparently we’ve been in recession for three months now. I am seeing absolutely no slowdown in growth whatsoever we have contracts that will take us into 2025 worth millions I’m trying to recruit staff at the moment the basic salary is 80,000 remote OTE of INXS of 200 grand I can’t find anyone, they’re all busy.

I think they said 2 years for the crisis bit, then i guess it will stabilise. But the stable situation may well be a worse standard than the pre crisis normal.

Although some people are saying the west is declining in general and tge impact of climate change might mean its never stable. Thats a bit depressing though.

Ukraine produces/produced less wheat than France and is/was responsible for only around 3.3% of global output.

There is no famine because of Ukrainian wheat shortages.

There may be one because of sanctions on Russia, who are not only the World's second biggest supplier of wheat and responsible for around 11.3% of total output, but as we all know, are major global energy exporters.

I'm not saying this to support of Russia but a lot of the problems we are facing now stem from the West's rush to pariah Russia and the USA's need for a "big bad guy" to feed their war machine now that middle eastern "terrorism" is a thing of the past.

Anyway to answer the OP's question prices won't go back down from my understanding, it just the rate of increase will slow. If something cost £100 last year and we've had 10% inflation, it will cost £110 now. If we then return to 2% inflation next year then it will cost £112.

The only way we see decreases is if we get deflation (which no-one is predicting) or if energy/supply costs drop to back down to 2019 levels and manufactures and suppliers are kind enough to reduce their profits (as if!) and pass on the savings to the consumer.

I'd like to say this is the new normal but I genuinely think things are going to get continuously worse until we tackle the wealth inequality elephant that everyone in power is ignoring.

I’m trying to recruit staff at the moment the basic salary is 80,000 remote OTE of INXS of 200 grand I can’t find anyone, they’re all busy.

we have a shortage of workers, particularly in certain areas

I'd like to say this is the new normal but I genuinely think things are going to get continuously worse until we tackle the wealth inequality elephant that everyone in power is ignoring.

won't happen

@Thehonestbadger I don't understand your point. I specifically replied to a post that said this is the first generation that have luxuries as standard but many young people don't have the luxury of wage growth or secure housing. That doesn't mean no one had it tough previously...

About 2 years

Inflation calms down, economic growth picks up and wages start to catch up.

Three things caused it. Covid. 14 years of money printing. And 25 years of productivity decline.

Yes but would add Brexit. Why the productivity issue has constantly been overlooked I have no idea. I guess because the resulting inflation of assets made people feel rich at least on paper?

Do you not think that indoor bathrooms and central heating, a welfare state to fall back on (even if it is a bit crap), free health care, employment rights, equality…etc are luxuries in comparison to the generations before us though?

My point is that I think my generation DO have luxuries as standard that the generations before us didn’t.