Is recession looming?

[miserlymartin]

Clearly Robert Peston can't remember the seventies. It was far far worse then than the relatively trivial scenario he paints and hyperbolises!

When Peston talks about 'within living memory' he does seem to be omitting the '70s - as a younger person that is understandable. As a serious journalist - less so.

Jeez why all the Peston bashing? Do you all think he's a fool? He's talking about a drop in standard of living. If you bashers have data showing falls in real per capita income in the UK during the 1970s -- and that they are worse than what is likely to come with current 5%+ inflation and barely rising incomes -- then you're welcome to share here.


GS

Peston may be right that the Govt doesn't realize the economic problems coming down the track towards them, though they may just be keeping quiet about it. And Peston seems to recognize that, whereas Covid was a temporary phenomenon, the recreation of the Soviet Union will permanently damage trade and living standards.
Then, Peston seems to be saying 'Why is the Govt not borrowing more to shield the population from the difficulties ahead?' Which of course will raise interest rates. He says:
But much of the inflation cannot be stopped. And the increase in the cost of money will only make the living standards crisis worse for poor people, and will increase the government's interest bill, further depriving it of funds for public services.
and
The raw politics of how much a Conservative government should be borrowing to help public services and poor people will be back with a vengeance.

The UK will have to make a permanent ajdustment to life being more expensive and challenging, with a significantly higher defence bill. For that we need to make permanent changes to our lifestyles, not borrow yet more, and hope that something turns up. On that evidence, I think Peston is a fool.

Peston is a fool, but he was trained at the BBC. Borrowing more will just hasten the UK's bankruptcy and add to our taxes. We also need to get out of Ukraine. It is not our war.

[vand]

Dunno what the beef with Peston is.. as a political commentator his job is to write about things that people care about, and clearly his article about the crisis of living costs was impeccably timed.

People can get lost in the minutae of any particular argument, but it's the themes and trends that are important to understand and position yourself for. There is always opportunity in crisis for those who are well prepared.

[Lootman]

Dunno what the beef with Peston is.. as a political commentator his job is to write about things that people care about, and clearly his article about the crisis of living costs was impeccably timed.

Crisis? What crisis?

Callaghan presided over a real crisis, despite his denial. This is just a blip. Is any Lemon remotely in financial difficulty because of this? I would be stunned. Brown's 2008 crisis was much worse and we fixed that.

[pje16]

Brown's 2008 crisis was much worse and we fixed that.

Really... we still have very low inteest rates as a result
Like all things in life, it depends on which side of the savers/mortgage fence you are on

[vand]

Dunno what the beef with Peston is.. as a political commentator his job is to write about things that people care about, and clearly his article about the crisis of living costs was impeccably timed.

Crisis? What crisis?

Callaghan presided over a real crisis, despite his denial. This is just a blip. Is any Lemon remotely in financial difficulty because of this? I would be stunned. Brown's 2008 crisis was much worse and we fixed that.

Jeesh. And I thought I could be insensitive.

[MrFoolish]

The economy contracted by 0.3% in April after it shrank by 0.1% the month before, official figures showed. - BBC News.

Seems a recession is definitely looming.

[Itsallaguess]

The economy contracted by 0.3% in April after it shrank by 0.1% the month before, official figures showed. - BBC News.

Seems a recession is definitely looming.

It looks like there's some considerable effects of the recent large-scale drop-off in COVID testing being played out in these recent GDP numbers -

End of mass Covid testing largely explains figures showing economy shrinking in April, No 10 says -

• No 10 says the shrinking of the economy in April was largely explained by the end of mass Covid testing. That “significantly impacted” on the GDP figures.

• When we exclude the falling numbers of Covid tests, the rest of the economy saw positive growth of 0.1% in April.

https://www.theguardian.com/politics/live/2022/jun/13/boris-johnson-conservatives-brexit-northern-ireland-protocol-uk-politics-latest


The ONS report on the growth figures backs up this claim. It says:

Human health and social work activities fell by 5.6% in April 2022, and this was the main negative contributor to April’s fall in services (detracting 0.5 percentage points as shown in figure 3). The driver of this fall was human health activities, which fell by 7.6%.

This largely reflects the significant reduction in the coronavirus (Covid-19) NHS Test and Trace activity following changes to testing policies across the UK, particularly the changes to the Covid-19 testing policy in England from April.

https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/april2022

Cheers,

Itsallaguess

[BullDog]

The economy contracted by 0.3% in April after it shrank by 0.1% the month before, official figures showed. - BBC News.

Seems a recession is definitely looming.

A blind man could have seen it, at least 6 months ago.

[pje16]

A blind man could have seen it, at least 6 months ago.

What has happened to him in the past few months then

[BullDog]

A blind man could have seen it, at least 6 months ago.

What has happened to him in the past few months then

He has been telling me "told you so" every few days.

[AWOL]

. We also need to get out of Ukraine. It is not our war.

The staying out of it strategy was such a success when the West ignored the invasion of Crimea. We should have remembered from the Sudetenland that Strong Man leaders aren't deterred by muttering our disapproval and doing nothing. An early proxy war is much cheaper than a full scale continental war.

[XFool]

Crisis? What crisis?

Callaghan presided over a real crisis, despite his denial. This is just a blip. Is any Lemon remotely in financial difficulty because of this? I would be stunned. Brown's 2008 crisis was much worse and we fixed that.

Indeed. There is only a war in Europe as the Kremlin seems bent on reinstating the USSR. Anyone would think something serious was afoot...

[AWOL]

Callaghan presided over a real crisis, despite his denial. This is just a blip. Is any Lemon remotely in financial difficulty because of this? I would be stunned. Brown's 2008 crisis was much worse and we fixed that.

No we Lemons are mostly/all not in financial difficulty but, we are not representative of the poorest and most vulnerable, there are families where the breadwinner(s) are working multiple jobs to make ends meet and the rising fuel and food costs have taken them from struggling to crisis point. I heard a woman at a foodbank explaining how she preserves fruit and veg in various ways to make them last and the enormous lengths these people go to in order to make the most out of not very much.

There are people out of work on £60-70 pound a week. Try living on that for any length of time. New shoes is suddenly a disaster.

Also there are people who have been living a life that they can afford with low interest rates who never took seriously the possibilities of escalating interest rates. This will increasingly be a problem. Now some people lacking in human kindness will say "they are idiots" or "they should have..." but the reality is that some people are less intelligent than others and some people are financially illiterate and others are just born optimists. None of these people is less deserving of care or sympathy than the rest of mankind. Arguably where they are without the capacity they are more deserving. The older I get the better I understand that a little thought can make most people's predicaments understandable and worthy of sympathy.

Our society could do with being more understanding and supportive.

Regarding Lemons, I suspect this is another leg of a secular bear market but we just don't have the historical perspective to know for certain.

[Nimrod103]

FED raised by 0.75%, highest since 1994. BoE must go for at least 0.5% surely?
I would have thought that an inflation/rasied interest rate induced recession in the UK is now a certainty.

[tjh290633]

FED raised by 0.75%, highest since 1994. BoE must go for at least 0.5% surely?
I would have thought that an inflation/rasied interest rate induced recession in the UK is now a certainty.

The rule of thumb used to be: increase base rate in half point steps, reduce in quarter point steps.

They seem to have forgotten that these days. We probably need a full point to give the pound a boost.

TJH

[pje16]

We probably need a full point to give the pound a boost.
TJH

They should do but have they got the guts to do so

[pje16]

Cluck cluck cluck
1.25%

[Tara]

Cluck cluck cluck
1.25%

Yes it’s a joke.

Inflation at over 10%. And interest rates at 1.25%.

“Don’t let those UK house prices collapse!”

This is the main policy now for the government and the BoE.

[AWOL]

A global recession is not unlikely. A UK recession, do you need to ask?

I am gobsmacked at the MPCs timidity. The GBP used to retain some reserve currency characteristics but is now just an EM currency. The only silver lining is the FTSE 100 has an inclination towards old economy stocks that are likely to do better than US tech giants in the coming storm.

I usually ride out market storms but am tempted to cash out. Anyone got a good justification for calling a bottom for equities?

[pje16]

I usually ride out market storms but am tempted to cash out. Anyone got a good justification for calling a bottom for equities?

I have lost a packet in the past weeks (more than my first house cost) but everytime that has happened over the last 35 years or so I have been tempted to bail out, never have and it has always come back stronger