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14 Sept 2023
Is the UK in a recession? Here’s how you can protect your assets
Tansy Dando
Senior Content Manager

In these uncertain economic times, many of us find ourselves wondering about the state of the UK's financial health. With headlines about economic downturns and fiscal challenges, it's natural to have questions. As such, we’re here to shed a bit of light on what a recession is and how you can take steps to protect your assets during these tricky times. 

*Please note: this blog article is for informational purposes only and does not constitute personal or business financial advice. Always consult your financial advisor before making any decisions about your savings, purchases, or investments.

What is a financial recession?

Before diving into whether or not the UK is currently in a recession, let's make sure we're all on the same page about what a recession actually is. Simply put, a recession is a significant decline in economic activity that lasts for an extended period — it’s typically marked by a decrease in gross domestic product (GDP) for two consecutive quarters or more.

It's like a financial winter, where the economic landscape becomes chilly, and the growth of businesses and employment stalls.

During a recession, several key indicators tend to worsen:

  • Unemployment: Job losses rise as companies cut costs to survive.

  • Consumer spending: People tend to tighten their belts, leading to reduced spending.

  • Investment: Businesses often delay or cancel their investment plans. This can signal a lack of confidence in the economy's future prospects.

  • GDP: As mentioned earlier, GDP shrinks, indicating a slowdown in overall economic activity.

  • Consumer confidence: Surveys and data on consumer sentiment can provide insights into people's attitudes toward the economy. A decline in consumer confidence is often associated with a recession.

  • Inflation: Rapidly rising prices can also be an indicator. And while inflation itself doesn't define a recession, it can contribute to economic challenges.

Now, let's move on to the pressing question at hand: Is the UK currently in a recession?

How do we know if the UK is in a recession?

Determining whether or not the UK is in a recession involves technical analysis of the above factors, and there are a lot of complex and conflicting elements at play. First up, there seems to be a decline in consumer spending and confidence. How do we know this?  Demand for restaurants and other aspects of the service industry has gone down. In August, the Guardian reported that the UK was on ‘recession alert’ as we saw a slump in the private sector. This suggests the ‘cost of living crisis’ is something we’re all feeling.

At the time of writing, it’s just been announced that unemployment has risen by 159,000 in the last three months. The number of unemployed people in the UK now stands at 1.46 million. What’s more, at 5.25%, the Bank of England's interest rate is at its highest since 2008. These rises indicate that economic times really are tough. The next interest rate review will be on the 21st of September, and this will give a good signal of things to come. 

Despite these indicators, there has been no announcement that the UK is in a recession and it appears that GDP has still been growing, even if very slightly. So it seems that, although the UK isn’t in a recession right now, it’s not off the cards for next year — but only time will tell.

How to protect your assets when feeling the pinch

Regardless of whether or not the UK is in a recession, knowing how to handle your finances wisely is in everyone’s best interest. So, let's focus on the practical steps you can take to protect your assets during these challenging times.

1. Check for grants and support

During recessions, governments often introduce stimulus packages and grants to support individuals and businesses. These funds can provide a crucial safety net. Stay informed about the latest government initiatives and take advantage of any financial assistance that may be available to you.

If you have plans to make home improvements, explore green energy grants such as the ECO-4 / ECO+ to see if you’re eligible for support.

2. Choose the right type of loans

If you're considering taking out a loan, be cautious and select the right option for your circumstances. Compare different options and seek support from a financial advisor who can ensure you have the ability to repay the loan and avoid overextending yourself financially.

3. Work with specialists for large assets

If you own significant assets such as a business or a property, again consider seeking expert advice. Business brokers can help you navigate the complexities of selling or buying a business, ensuring you make informed decisions. 

Meanwhile, mortgage brokers can assist in finding the most favourable mortgage rates and terms for your property investments. If you need to remortgage, they can help you get the best deals.

4. Diversify your investments

Diversifying your investment portfolio is a tried-and-true strategy for managing risk during economic downturns. Spreading your investments across different asset classes, such as stocks, bonds, and real estate, can help reduce the impact of market volatility.

5. Build an emergency fund

Having an emergency fund is crucial during uncertain times. Aim to set aside three to six months' worth of living expenses in a readily accessible savings account. This fund can provide a financial cushion in case of unexpected job loss or emergencies.

6. Stay informed and adapt

Keeping a close eye on economic trends and staying informed is key to making educated financial decisions. Be prepared to adapt your financial strategy as the economic landscape evolves.

Compare wealth and financial services with SpotDif

In these challenging economic times, it's more important than ever to make informed financial decisions. Whether you're looking to invest, protect your assets, or secure a loan, the right financial service providers can make all the difference.

That's where SpotDif comes in. Our tool allows you to compare a wide range of wealth and financial services, ensuring that you get the best value for your money. By using SpotDif you can make informed choices that will help safeguard your assets and secure your financial future.

Remember, your financial well-being is in your hands, and making wise decisions today can lead to a more secure tomorrow. Get started with SpotDif today and make sure you get the best price on financial services near you.

Tansy Dando
Senior Content Manager
I'm always curious to understand and unpick the latest trends for all things wealth and business.
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