The terms' recession' and 'inflation' make you want to save more for the future. Here is how the upcoming downturn in the UK could affect your life.
The rising costs have begun to pinch your pockets already. The prices of oil and gas have also skyrocketed, and there is a chance for the price to go higher by the end of the year. So, that leaves us with the question of what we should do to prepare for the upcoming situation. Well, it's time to buckle up and prepare for the worst. Since the onset of 2022, we have felt the squeeze, and before it comes down to us, here are a few things to know beforehand. Read on!
What Could Cause A UK Recession?
Multiple factors have contributed to the financial crisis we are facing in the UK and, at large, the rest of the world. When looked at individually, they are significant hurdles but not exactly disasters. But with the combination of the successive lockdowns and slowing down of the economy, along with the invasion of Ukraine by Russia and the damaging of the international market price of oil and gas, the volatile climate could take a disastrous tune.
Sharp Rise In Household Bills
You must have noticed a sharp rise in almost everything you have been purchasing from the beginning of the year. There is a 54% jump in electricity and gas, and the Bank of England believes costs will rise by October by about 40%. This could take the bill as high as £2,800 a year. The interest levels could also hit more than anything seen in 30 years. The inflation and snowballing cost could leave businesses feeling poorer. This is one way the economy could contract and lead to a recession shortly.
Is Another UK Recession Knocking At The Door?
Not everyone is predicting a recession. However, the OBR growth was expected at 3.8% this year. In the IMF, It pitched at 3.7%. But even optimistic forecasts are not predicting much change with the odds of a downturn. There is a higher chance of inflation spreading for a more extended period.
How Would Recession Affect You?
Economists and experts worldwide are expecting a recession, but no one can really predict when it will come, how long it will stay, and what its severity will be. This makes it challenging to outline the impact of it on the workers of the UK. It is difficult for businesses to save during a recession, which means there could be a loss of jobs and a hike in inflation with price hacks and spiraling price hacks. Taking the context of the 2008 recession, there was an unemployment peak of 10%. Nothing can be said for sure yet, but if you have any debt, it's best to pay it back.