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I don’t think the 2008 one was that bad
It all depended on whether you had a secure job or not. It wasn't the same circumstances we have now with supply chain issues and the cost off living increasing, it was all about borrowing.
I worked for a small company at the time, which did work for lots of small/medium companies, so I got a good feel for what was going on in the world of local business. Every conversation was about cash flow or redundancies. Most of the companies we did work for simply no longer had enough work to sustain themselves, and in some cases couldn't pay their staff. Many of us who still had our jobs were largely unaffected, but the internals of the machine were falling apart. Seeing what was going on from the inside, it was bad.
What we're experiencing now is very different. Economists seems to be less concerned, but I can't help but feel there are so many complex factors involved that things could fall apart pretty quickly.
I don’t think the 2008 one was that bad
The bulk of our work back then was for local Estate Agents - in the days when property details and letterheads were actually printed! - one after one they collapsed and so did 50% of our work. And then the family business had to close.
There's so much riding on the housing market 'working' that I imagine they'll pull out all the stops to ensure people don't fall back on their mortgages. Probably bunging loads of taxpayers money at it, thus kicking the problem down the road....
A lot of economists are very concerned. Especially as the tools to fix this are pretty limited.
Agree with Daz et al above - a lot of money has been slammed into the economy since 2008, and gone straight into places it's not super useful bar keeping things stable. Ergo GDP has grown, but wages have stayed flat and inequality grown. And yes those unhappy trends are worse in the UK - thanks Dave!
There’s so much riding on the housing market ‘working’ that I imagine they’ll pull out all the stops to ensure people don’t fall back on their mortgages.
Housebuilders are now reporting downturns in new-build reservations.
I expect due to mortgage offers being withdrawn, or people deciding to sit tight in their current homes with an affordable mortgage.
The print trade press is full of companies going under at the minute.
The big ones use loads of energy, have very expensive kit on finance and material prices have gone through the roof.
So glad there’s just me and the dog to keep busy!
Fellow ink monkey here. Every recession since the early 90's has seen me out of work. It gets to the point when you see a couple of unknown suits walking around the company that you assume it's the receivers. Only positive these days is money is so shit that taking a minimum wage job (all I'm qualified for) won't be the hit it once was. Had hoped to hang on to the industry for another 5-10 years before retiring, and current employer seems fairly solid so fingers crossed.
some serious price fixing going on
before the recent U.K. gov policy changes I’d have said this is folks making hay while the sun, ironically, shines.
OPEC are in a tough position given the USA is in energy surplus and oil had a recent low price period.
If only we had had some kind of push to wean us off burning things for energy. 🤷🏻♂️ like some sort of impending global problem the U.K. could have taken a strategic and technological lead in.
As it is I tend to agree with folks. Compared to 2008 this looks like a real tricky one.
Perhaps it’s time for some U.K. gov honesty? Clearly a false dilemma, but either ‘we can make a difference. It’s just that we’ve been inept for the past 15(?) years’ or ‘we can’t really make a difference. We just futz around the edges. Buckle up!’
😣
Truss supports no-blame evictions, inflation will cause people to become homeless, many mortgagees will have to sell up, falling prices could mean negative equity, big landlords will acquire more properties, rents will go up due to increased demand, tent cities will appear as in the US. The Tories are now proposing to abolish the need for 'affordable' housing in new developments.
Company directors buy back shares to increase their bonuses, massive dividends have been paid out, money is not going into investing for growth. Rentseeking, the most parasitical form of capitalism, is the way forward for the rich and misery for everyone else.
I expect due to mortgage offers being withdrawn, or people deciding to sit tight in their current homes with an affordable mortgage.
Absolutely - I think you'd have to be pretty desperate to move in the current situation.
people deciding to sit tight in their current homes with an affordable mortgage.
This is exactly what is happening, far more activity in re-mortgaging than in new (i.e. 'moving house') mortgages
I am currently mid way through an expensive house alteration, which was planned for 5yrs, funded by a remortgage.
Currently committed so need to see it through but very concerned in 4yrs when the fixed rate ends. What was originally only a couple of hundred extra a month, which seemed tiny compared to the nursery fees we had been paying will balloon massively.
I worked out we would be very tight if mortgages hit 7% which no one was expecting. I did not factor inflation being 10% and everything else going up hugely.
I’m trying to get the build done as fast as possible to avoid the worst of further increases. Already had the brickies put their rate up from £200 to £225. As a paye I unfortunately have no option to increase my rate as my costs are increasing…. I keep telling myself this is an investment and I haven’t just spent it all on a flash car / big holidays.
We were thinking of replacing our 14 plate Kia next year. That’s on hold. We are not planning any holidays other than camping next year. We were already very frugal with energy, and hopefully the alterations will equate to less usage as it’s insulated much better
I really can’t see how those at the sharper end are going to cope,
I really can’t see how those at the sharper end are going to cope
There will be a huge number of people really, really badly affected.
The Tories are now proposing to abolish the need for ‘affordable’ housing in new developments.
'Affordable Housing' has been a fudge for years.
Many new build estates get passed with X amount then developers go back to planning and get it reduced by a loads because of some trumped-up issue.
The only way to build affordable housing is for the state to get back to building them again. And then not sell the things on with right-to-buy schemes. If circumstances mean you can now afford to buy then go and buy something else and leave your house for someone else starting out.
Haven’t wages been trailing inflation for years anyway? So either companies can afford to pay us and choose not too, or many companies are really on the brink and have been for years?
Wages for folks in public sector, high supply (lots of potential employees) jobs, and those staying in the same job have fallen so far behind! As per other threads, even high demand/low supply jobs seem to have modest salary incentives for recruitment.
The money that could have been wages in for-profit companies has been targeted at ‘share holder value’ in many cases I’d guess.
In public sector I guess it has been a consequence of ‘austerity’ (the ideological kind. Folks certainly felt the real kind) and cost control.
And, yes, many companies have been on the edge. Some will need to close.
I’m already thinking harder on how I can improve departmental productivity and increase the value and volume of work. Cost cutting is possible but unlikely for my department, but … Thankfully the high competition for our skills continues.
Some of the biggest profits are to be made during recessions; ..........price increases of things like fuel, energy, food etc. Disaster Capitalism is very lucrative for those who have power....................That’s at the core of what we’re seein
I survived 2008 until 2016, because fundamentally this isn't correct.
Sure some hedge fund probably made a killing shorting some stocks, but that's not how the actual industries work.
The energy prices (and thus the whole industry) tend to track the global economy but delayed for a few years. If things are going well, there's money coming in, and people get employed to build things. But when the economy goes down, that takes a little while to trickle through to a drop in energy prices, which is then further delayed as projects have inertia and tend to carry on until there's a decision to be made on further funding. So by ~2015 the energy sector reached the point where Shell was closing its own offices making thousands of engineers redundant, at the same time the contracting companies that did the design work for them hit an exponentially worse wall as unlike the producers they don't have an income at all.
By the time I got made redundant in 2016 even the recruitment consultants had gone bankrupt. You could go on job search sites, set the criteria for any job, any level, anywhere in europe, and there was one listed in Germany (bearing in mind I reckon there must have been about 5000 engineers made redundant in the Reading area alone).
For an easier to visualize analogy, substitute energy for most other sectors. If food prices drop farmers might make a little less money, some marginal ones might be bankrupt. But if as a result all farmers stop buying tractors for a few years to save some cash then tractor manufacturers are hit exponentially worse.
The recession itself isn't that big a deal tbf. Recession is mostly an accounting term, and it's not like we were doing particularly well with .001% of growth. But all the stuff that was crushing people before, is still going to be crushing them.
(as a normal everyday person, it matters barely at all whether we're in recession or growth, what matters is where the spoils are going; a boomtime for big business can still see everyone else get poorer, and that's been the driving direction for most of my life)
Except of course that a recession is a good excuse to slash public services and for companies to lay off staff
We have a fixed rate mortgage at 1.6% until 2026 and are lucky to have a monthly surplus. Should I bung that in savings, or overpay the mortgage? We have 15 years left on the mortgage. I expect overpaying on the mortgage is the best bet due to the total size of the debt, despite interest rates increasing.
We've been discussing this. I'd lean to overpaying the mortgage, to help lessen the punch in the face when the deal runs out.
Should I bung that in savings, or overpay the mortgage?
Overpaying the mortgage (so long as you can avoid early repayment charges) is a guaranteed way of saving interest in the long term, but the main thing to be wary of is that you can't get that money back again if you suddenly need it. So while it's (probably) a good idea, make sure you've got your 6 months expenses savings safety net first.
Perhaps it’s time for some U.K. gov honesty?
Good luck with that.....
Was interesting but on the Rest is Politics Podcast last week about Truss at the conference. Admittedly it was said by Alistair Campbell, but was funny nonetheless.
If I had an excess I would be keeping it separate from the mortgage and then on remortage I'd be using it to reduce the burden as long as you can do so keeping within any charges
That gives you flexibility
Aren't we partly in this situation now because the powers that be have been kicking the can down the road for the last 15 years? And isn't a lot of the inflation we are now seeing a result of the Bank of England (well, all central banks really) pumping money into the system since 2008? That and dropping the interest rate to 0.25% were supposed to be emergency measures IIRC? Yet here we are only just unwinding that almost 15 years later.
Our economy appears to be based on services and selling ever more expensive houses to each other, all fuelled by cheap credit.
I find it laughable that people blame Truss and Kwarteng for this mess when it's really been 15 years or more in the making. Whether through stupidity or cunning they may have triggered a faster decline, but it surely had to happen.
I'm worried about how this might affect me and mine, and have great sympathy for those that are on the edge already, but I think as a nation we need to take some pain and learn to live within our means.
We have a fixed rate mortgage at 1.6% until 2026 and are lucky to have a monthly surplus. Should I bung that in savings, or overpay the mortgage? We have 15 years left on the mortgage. I expect overpaying on the mortgage is the best bet due to the total size of the debt, despite interest rates increasing.
https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/
this now includes a calculation if you are better to save it or overpay based on the relative rates.
if you are on a low fix and can get a decent savings rate, I think the balance has shifted to saving.
make sure you’ve got your 6 months expenses savings safety net first.
😂😂😂 Oh, wait, you’re serious? How many people under the national average wage do you think have 6 days saved, never mind 6 months?
Our economy appears to be based on services and selling ever more expensive houses to each other, all fuelled by cheap credit.
Yup!
And
How many people under the national average wage do you think have 6 days saved, never mind 6 months?
How many people under the national average wage do you think have 6 days saved, never mind 6 months?
FTFY
Well yes, but I didn’t want to be over dramatic.
And isn’t a lot of the inflation we are now seeing a result of the Bank of England (well, all central banks really) pumping money into the system since 2008?
Short answer: No.
The longer answer is that inflation didn't move in the 12 years QE was used to stabilise the economy post-2008. Then covid happened and we experienced supply side shocks which affected global supply chains resulting in higher prices. Then Ukraine happened which created even bigger supply side shocks in energy and fuel price inflation. Add those two things together and we are where we are.
The inflation we have now has nothing to do with the amount of money in the economy. There is too little money in the economy as a whole, and even less in the real economy (excluding offshore assets held by billionaires and corporations). The medium term danger is not inflation, it's depression and potential economic collapse. You're worrying about the wrong thing basically.
Aren’t we partly in this situation now because the powers that be have been kicking the can down the road for the last 15 years?
There a few big factors at play, that is certainly one, but then it is compounded by brexit, Covid, and the Russian war on Ukraine.
Two of these four big impacts were easily avoidable, self inflicted injuries, if you like... The other two are global issues that the the UK as a country, could have coped much better with, without the added economic antagonism of the easliy avoidable two.
One crisis is managable, but four heavy weight crises at the same time, nope.
I find it laughable that people blame Truss and Kwarteng for this mess when it’s really been 15 years or more in the making. Whether through stupidity or cunning they may have triggered a faster decline, but it surely had to happen.
Replace "Truss and Kwarteng" with "Tories" - and they've been in for +12 years.
Replace “Truss and Kwarteng” with “Tories” – and they’ve been in for +12 years.
Indeed, but lack of infastucture investment goes on before that time into previous labour governments too.
When faced with the current 'perfect storm' of ecomomic, environmental and socially damaging scenarios, the UK would need a team of elite, perhaps the worlds best, project managers, all working TOGETHER toward common long term goals in government.
Then I look at the current government, and I find it difficult to envisage.
team of elite, perhaps the worlds best, project managers
The A-team theme tune just went through my head
If you have a problem, if no one else can help, and if you can find them, maybe you can hire... the A-Team.
One crisis is managable, but four heavy weight crises at the same time, nope.
^^^^that.
Although the rest of Europe is facing a crisis, but not quite as acute as the UK, one of those factors obviously not being an issue.
Oh, wait, you’re serious? How many people ...do you think have 6 days saved, never mind 6 months?
probably not many, but
We have a fixed rate mortgage at 1.6% until 2026 and are lucky to have a monthly surplus.
he is one of them, and is asking how best to utilise his good fortune safely/effectively
Oh, wait, you’re serious? How many people under the national average wage do you think have 6 days saved, never mind 6 months?
I'm reasonably confident that the person asking what to do with their 'monthly surplus' (which is the question I was answering) does not fall within this group.
@IHN - out mortgage is with YBS. In short we are almost a mortgage prisoner, which is where you can not remortgage to a cheaper rate instead you are stuck on the SVR which is more expensive. As we are not in negative equity, we do not fall under the mortgage prisoner category. As my wife now only works 2 days a week due to childcare and therefore our income has dropped, we do not pass the affordability tests. Therefore once our currentl 5 year rate ends next year, we will be stuck on the SVR until we sell the house which is currently on the market. I’m struggling to sell my bike at the minute let alone my house.
And yes, I will be asking them why they think we should pay, say £1800pcm yet they won’t let us remortgage and pay £1600pcm.
Martin Lewis was campaigning about this situation, there maybe some useful support and advice on his website
Martin Lewis was campaigning about this situation, there maybe some useful support and advice on his website
^ this.
It is crazy that the 'rules' can force folk to pay more in an attempt to save them from less...
Replace “Truss and Kwarteng” with “Tories” – and they’ve been in for +12 years
And before that we had New Labour for 14 years. Forget the colour of the rosette, it creates too much division amongst us common folks. I would apportion blame to politics and politicians in general - their horizons are too short to do any real good, all they seem to be interested in is winning the next election and retaining power. This leads to short term reactionary policy when what we really need is a government that can play the long game.
Remove the politics from politics and we might stand a chance. Long live the revolution!
Take a look at today's PM question time. Ian Blackford confronts Truss on her tanking the economy and her smug responce is that they brought in the energy cap....
So, because they won't tax Big Oil, the public purse pay, which raises interest rates and you pay via your mortgage.
Cheers Liz x
Ps that's before we look at what the gov has been doing for the past decade in Health, infrastructure, etc.
We have cut any potential recovery off at the knees for ideological reasons.
Sorry, excuse my stupidity. What do you mean by this? Especially the last point.
Sorry for the delay in replying, but yes, Brexit. The Office for Budget Responsibility says it will shave 4% off annual growth. That means £100bn of lost output annually, a mere £40bn of which would have come to the treasury to spend on public services, or give to their mates.
It is one major reason why we have had one of the slowest economic recoveries from the economic shock of covid, and it isn't something that's a one-off cost. Our lack of access to the biggest market in the world will cost us billions every single year until the promised new markets turn up*.
*they won't.
It should be being shouted from the rooftops every time one of these Brexiteer ministers turns up on telly, but there appears to be some kind of polite omerta about it.
Lots more people on the peripce peripise edge than most of us realise...
My sister has her "big" house (3 bed semi), two cars, nice garden... On the outside they look stable, but their finances are tight.
I think the middle classes are going to suffer low than many of them realise.
I've been putting away over half my wage since the day after the brexit polls
I was lucky to never living close to my means and mr mrs is the same
Still wont be enough I dont think
I'd agree that there are a lot of "middle class" people with very tight finances. Plenty of people with large mortgages not only on their main residence, but also a buy to let where the rent only matches the interest only mortgage payments. As these mortgages come to the end of fixed terms things will get sticky and the Range Rover Sport that's on finance might have to go.
I've had the idea before, that we need a permenant trans government regulatory body.
No, not the rocky horror picture show trans, hahah! before anyone calls me 'woke' 😉
Kinda like the house of lords, but it has to be a cross party thing.
The house of lords should in theory, fill this role.
But it's problematic for a number of reasons. Two resons that spring to mind stright away are
1) They they can't techincally over-rule a commons vote once it's been batted back and fourth between both houses a few times.
2) The tendancies of certain sitting Prime ministers to promise peerages for donations.
So there's room for corruption straight away.