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?

Christ the complacency on this thread. Why should we roll over and take it? How can people give themselves a 'buffer' when they don't have anything left at the end of the month? How can people tighten belts any more than they already have through the past decade+ of austerity? Monetary responses are not physical laws. Economics comes with choices, theories, options- not inevitabilities.

Look at history (I studied economic history 😀) there's always been cycles of economic growth and contraction. Typically it takes a year or two to stabilise then a period of low growth before picking up.

But how long each individual recession lasts is very dependent on the cause - in this case a major trigger is Russia's invasion of Ukraine causing energy price shocks. Until that is resolved in some way I cannot see a return to meaningful growth. That doesn't necessarily mean every country or within any country are affected universally (Norway is doing well!) but globally it's going to cause issues

There is no such thing as returning back to where we were. The most we can hope for is stability and modest growth and even that will take years. The boom years were fantastic, we were brimming with confidence in our economy. Globally, we seen as a mini powerhouse and respected for our genuinely international outlook and entrepreneurship. Salaries and career opportunities were seemingly inexhaustible. We managed to keep the lid on Pandora's Box in 2008 and kept it on for years afterwards (even though we all those cracks were visible if you peeped inside). It was fun while it lasted.

And, yes, it is obviously cyclical but triple whammies can cause blips and we are generating an outlier this time around.

@SadOrWickedFairy Completely agree.

Grocery shopping in the USA is extortionate.

Labour cock ups led to Tory bodging a repair which fed into Tory cock ups. We also don't exist in isolation, global events, governments, policies and economies have a direct impact on us too.

Because it's a cycle. It's a shit cycle, but it's a cycle. It will end.

Unfortunately I think you are right. People have had it 'too good' for too long. I'm in my 40s and even I think there has been a stark difference between my own childhood and that of my kids.

Even something as simple as pumpkins at Halloween. We never had Pumpkins at Halloween. They were rare. Now so much fresh produce is transported half way across the world. That comes at a price. Look at how many people on MN with bog standard jobs have stuff like cleaners and gardeners.

Unfortunately our entire economy is built on retail and services. It relies on people having money to spend. When those people stop spending, the whole house of cards comes tumbling down.

Exactly.

And a previous poster eloquently explained earlier in the thread the increased cost of items required for food production and yet you still have people saying but why are food prices increasing? do they think food producers and suppliers are or should be charities and just give the food away or make themselves bankrupt by not increasing the prices in line with what they are being charged? What then when producers and suppliers are not producing or supplying?

It is not a cycle like seasons or planetary movements, this recession is caused by:
-external factors (COVID, Ukraine)
-political choices (Brexit, economic policies of the UK government - specifically underinvestment since the last crash)

Also parts of Europe that rely heavily on growing food/crops have suffered ruined crops due to the extreme heat over the summer.

Unfortunately our entire economy is built on retail and services. It relies on people having money to spend. When those people stop spending, the whole house of cards comes tumbling down.

I agree, I think this is the nub of the problem a consumerist society where the consumer wants everything cheap. It's unsustainable.

@Newnameoclock when did the 08 cycle end?

It isn't about 'wanting everything cheap' - in the UK the average family is £8,800 worse of than the avergae family in France (according to figures widely discussed over summer) - in the UK we have extremely high housing, transport and childcare costs - the basics of living are far more expensive in the UK, and inequality in the UK is far greater than in most European countries - meaning those at the lower end have little spare cash because those at the top end have more spare cash.

The fact average people in the UK have little spare money is a deliberate choice of the governments since 2010, when the Tories started dismantling all sources of support e.g. underfunding transport, underfunding childcare, raising business rates.

Brexit is a factor not a cause. If you think Brexit is a cause, go look at some statistics dating back a few decades. Indeed some argue Brexit is as a result of the ineptitude, rather than even being a factor.

We should have been better prepared for a crisis or two (insert any worse case scenario, GFC, Covid, Climate, War, etc) with some savings in the bank, either individually or as a nation (not both). If we have a nation who doesn’t educate, mandate and reward, but rather taxes and spends savings out of existance for the general population, then the responsibility for savings passes to the state.

Our state failed.

I very much believe that we in a new normal. Labour said it best when they left the ‘no money left’ note on the desk of the chancellor in 2010. We’ve been printing free money to the govt since then via QE, along with a squandered tory austerity project. most people with half an interest in economics always knew out of control inflation was a risk. Chuck in various other factors and you can only see a few ways out of this mess.

Those people fortunate enough to be able to ring fence their assets will pull up the ladder and enjoy warmer climes, insulated from the real world.

The rest will need to decide if nanny/welfare government is something they are prepared to be taxed to high heaven for. The middle ground will be a continuance of where we are now and the longer it goes on, the more extreme the final decision will end up being.

Thanks for this, very very interesting and thought provoking.

I remember thinking in 2008 that we hadn’t really changed any of the structural issues that caused that 2008 recession/depression in the first place- the over lending and the relying on rising house prices to make ordinary people feel rich.
I noticed that wages have never recovered since then in the UK (so we weren’t actually rich as a nation) and that we relied on cheap imported skilled labour then. So now since the complete madness that is Brexit even more people will be finding it incredibly unaffordable to live to the same standard, or any acceptable standard, due to a perfect storm of government underinvestment, and now unaffordable cost and patchy supply of materials and basic supplies including food. PPs are quite right to be horrified that we are not investing in renewables and nuclear. We absolutely should be- that and creating skilled green jobs.

How can they justify increasing council tax again? I'm so fed up, have a good career but I just can't save and fed up of paying for everyone else when I know I'm old there will be nothing left for me.

I think with the way this government operates even when we’re out of recession, technically, in 2-3 years time it will still be awful for much longer to come.

Where possible move jobs, do qualifications, get promotions etc to increase your earnings.

Because council costs have gone up. Council budgets from central governement have been cut by huge amounts - like 75% cuts - and yet councils still have the same legal duty to provide e.g. social care, children's services, education support services, road repairs, refuse collection, planning enforcement...

Only die hard Brexit voters are still refusing to admit Brexit is a cause.

Of course it is a cause! It is a major additional shock to the UK economy and we have introduced additional costs into our supply chains and to businesses.

Brexit was a shit idea, and we can now watch it in real time.

It will be over on a Thursday. 2.47pm. Just can’t tell you the month or year I’m afraid

One of the first things Cameron and Osborne did was absolutely slash Central government grants to local authorities, and at the same time to give local authorities new responsibilities that they had to pay for, that Central funding had previously paid for.
So for example, public health- so you can imagine what the costs of a global pandemic has done to those budgets.
And plus the inevitable demographic time bomb of an ageing society to care and pay for. Plus we have taken away the young healthy tax paying immigrant population of EU workers who put in more to the UK economy than they took out.

migrationobservatory.ox.ac.uk/resources/briefings/the-fiscal-impact-of-immigration-in-the-uk/

this is interesting

Oh I was expecting 10 years ish.

Things seem to go to shit every 100 years or so hey. World wars etc.

Just to put inflation into really simple terms in case there's anyone reading who's a little confused that prices will never go back down:

Think of it as the old 'Back in my day you could go to the shop with 50p and it would get you milk, bread, eggs, cigarettes and some sweets!'. Everything costs a LOT more than that now, but we're paid a LOT more money than we were back then so it balances it out. That's what will eventually happen once the economy stabilises. It might take a while, and we might never quite get back to where we were, but our wages and everything else will start rising to match the COL increase eventually. If food prices double, then wages will eventually double.