Britain 'Heading For Recession'

[j1979]

it seems that we are at the start of a recession, and pessimistic estimations are that it will be the worst economic times since the end of WW2. House prices are crashing, Repossessions are up, Unemployment is rising, urban developments have slowed down (here in Sheffield seem to have stopped), Gas up 70%, oil wont stop rising.

so how does everyone feel about it? are you worried? do you think it is all scaremongering? do you think it wont effect you? or are you building an underground bunker as we speak, and stocking up on beans from Asda?

and anyone any idears what can be done to stop it, or is it impossible to stop?

[TheAnimus]

The problem here is the options really try to over simplify it.

House prices in many areas will drop quite harshly (i'd put manchester as my pick of cities to short). Thats not to mean it will everywhere.

Rents are going to continue rising as we've seen, the basic cost of living is also going to sky rocket. £1k gas bills by the end of the year, 150p per lieter petrol too. The hardest hit of course been the poor people who are often on pre-pay meters.

The problem is how do you define inflation. RPI, CPI?

[pollaxe]

I think a factor in this was that housing prices were artificially high anyway. They're now dropping to a more realistic level.

I'm really not sure what we're heading for as a country but I'm pretty sure the way the press talk such things up makes things worse than they might've been anyway.

[directhex]

i wonder what my house is worth today. it was grossly undervalued compared to comparable properties when i bought it, pretty much at the price peak

[IBM]

I think it's all scaremongering, but it's going to hurt all the same. As the owner of a small retail business, it doesn't look good - although saying that, while the sales of big ticket items have fallen, small accessories/gifts/cards etc. are still growing, and for specialist services, like custom made furniture, are showing very strong growth.

Even so - and I am a pessimist - I can't help but feel that there's an overall drive forward, economically speaking. Whether it's greed driving people to buy, or 10 years of good times leaving people reluctant to cut down on spending, or even new technology driving spending (iPhone 3G anyone? Or even a toyota Prius for that matter) it looks like whatever downturn could be short term. Quick correction, quick recovery. That's the hope anyway.

[The Hand]

I voted possibly 20% drop in house prices and high inflation. I saw an interview recently with the head of Citigroup saying the downturn could last for 2 years. I heard a number of others say simliar things.

[Rave]

I've gone for 30-40% drop and serious inflation, though I'm not sure the two actually go hand in hand. If the bank of England raise interest rates to try and rein in inflation, then house prices could fall drastically. If they allow inflation to remain high, then house prices won't fall so much in nominal terms though of course in real terms they will still be worth less.

But anyway, whatever happens, it's going to be bad. You can't have a decade long debt binge without suffering a mighty hangover. Too many people have borrowed too much money, and now it's payback time. It was always going to happen, I'm only surprised the bubble took so long to burst.

[Whalefish]

It's nothing like the other recessions. Here is an excellent description of the situation we are facing.
State backed financial capitalism has done for us.

[Steve]

I'm hoping for a house price drop... only way I'll afford one!

[Kumagoro]

I think houses prices will drop lower than 50% although I dont think inflation will
be out of control. There will be very few places which dont have very big drops.
Flats will obviously be the worst hit.

Also rents are already coming down. There are many more places to rent
as people cant sell and are trying to make at least some money. Last year you had
to pay what the landlord was asking or very close to, now they are accepting much
less than whats being asked.

[Stewart]

Going by newspaper reports, the housing market will crash, oil will run out completely by next Wednesday, leading to nuclear war between the major powers, followed by a brief period of cannibalism, and then the inevitable destruction of the human species.

Thats if we all haven't been stabed by then, of course.

[dave87]

I'm hoping that the government will make the hard choice and control inflation, as that is the factor which is likely to do the most damage to the economy in the long run (reducing international competitiveness, reducing living standards of those who are on the lower incomes, etc).

It also means we are likely to find the speculators will put larger amounts of money into the UK in order to gain from high interest rates (the likely method to control inflation) and as such the availability of finance for business expansion and the beginning of a strengthening of the UK economy.

I still think we have a way to go before that happens though, as the debt hangover from the years of cheaper finance options have stretched many beyond what they can comfortably afford. I'm just hoping the job market remains reasonably buoyant, as that's going to have the most impact on me when I leave university.

[Gr44]

Going by newspaper reports, the housing market will crash, oil will run out completely by next Wednesday, leading to nuclear war between the major powers, followed by a brief period of cannibalism, and then the inevitable destruction of the human species.

Thats if we all haven't been stabed by then, of course.

lol. Classic =)

[cubiter]

Fine balance between 90s slowdown and mild meltdown. I agree that the credit unavailability will hurt many, but then it shouldn't have been so easy in the first place. If it lasts 10 years like it did in the 90s then my kids should be able to afford a house. Over time, high economic growth cannot be maintained for ever. I blame the banks.

[Stewart]

Its all about fanny and freddie, don't you know.

I read about it in a series of childrens books.


Fanny And Freddie Default On Their Mortgage Payments.

Fanny and Freddies Mortgage Backed Security Bonds.

Fanny and Freddie Get Evicted By The Secret Police.

They have a dog called Ben. He likes chasing sticks and sleeping. He was put down due to the rising cost of pet food in book 2.

[cubiter]

OK, I blame the banks, and Fanny & Freddie for defaulting. Selfish.