Recession 2020 and Beyond

[JEREMY HAWKE]

Very little attention is being paid to this and you would have it expected it to be mentioned more on here.
It is highly likely as we exit from this horrendous mess that we will see a massive downturn
How are people preparing for this . ?
Will the extra borrowings that companies are taking on actually put the business in difficulty due to the large loans that are being offered.
Is your business ready to fight in the trenches ?

 

[Interestedobserver]

Anyone who isn't expecting to have a battle on their hands and knowing they will need to seriously adapt/change what they do has got problems

Too many people with their heads in the sand IMO

 

[dotcomdude]

Unless we find a reliable treatment or vaccine for coronavirus in the next few months, the economic fallout from this is going to be horrendous.

Both the S&P 500 and the FTSE seem oblivious to this, but I think when the reality dawns over the next month or two they will probably wake up (by dropping 30%).

Personally I'm hoping that Bitcoin becomes a bit of a safe haven, and heads towards some of the dizzy heights some have predicted - especially after the halving event yesterday.

On a personal level, even though all of our clients have 'gone to ground' for the time being, we're very well insulated.

I'm aware that there are literally millions of people that will suffer if we don't come out of this well...

 

[alan1302]

Unless we find a reliable treatment or vaccine for coronavirus in the next few months, the economic fallout from this is going to be horrendous.

Get prepared for horrendous then - no vaccine will be here within a few months.

 

[The Soup Dragon]

I think once people start going back to work and the furlough scheme is stopped or tapered off and wages have to be paid from companies that are not trading at typical levels then it will get very real and scarey for a lot of people. I hope the sun keeps shining as there is a long old haul ahead.

 

[dotcomdude]

Get prepared for horrendous then - no vaccine will be here within a few months.

I hope for the best and prepare for the worst (where I can)

 

[Financial-Modeller]

Wait until we start to see credit defaults globally becoming the norm. The effects could dwarf the GFC.

 

[Bob Morgan]

Very little attention is being paid to this and you would have it expected it to be mentioned more on here.
It is highly likely as we exit from this horrendous mess that we will see a massive downturn
How are people preparing for this . ?
Will the extra borrowings that companies are taking on actually put the business in difficulty due to the large loans that are being offered.
Is your business ready to fight in the trenches ?

Thanks for raising the issue - I have been thinking precisely the same! There must have been many sat at home on 'Fairclough' whose only plans appear to be 'Rearranging the Deck-Chairs' and 'Choosing the Music for the Band,' as the ship begins to sink! Now, and just for fun, consider how 'Brexit' will be dealt with at the same time!

 

[Mark T Jones]

I'm far from a doom-sayers and yes, I agree - recession is niitable

Key questions are what for the recession will take and what 'shape' it wil be

To be fair. most businesses at this moment are weathering the siege. Some are taking the opportunity to review plans, others are just hoping (Quite a lot we never built on anything more than hope)

My own plans aren't particularly dynamic or dramatic, just revolve around focusing on more reiliant industries. Fortunately I can survive a couple of horendous years.

 

[Bob Morgan]

"It's a RECESSION when your neighbour loses his job; it's a DEPRESSION when you lose yours!" (Harry S Truman)

 

[Newchodge]

I think there is going to be a massive change in people's behaviour. I cannot see pubs and restaurants getting going in any meaningful way if 2 metre social distancing is required as they just will not be able to get the customer numbers they need to survive (quite apart from the impossibility of their staff maintaining a social distance. If it isn't required and people currently believe that it is necessary, a lot of people will not go because they won't trust the relaxation of controls. So a huge sector with little chance of survival.

Then you have all the people who have realised that you do not need to go shopping and spending every day, so the High Street will suffer even further, even if online shopping survives.

Separately, I reckon there will be at least 6 million unemployed. Which takes a huge chunk of disposable income out of the economy.

I think it is going to get very tough. Then there is Brexit and the need to do something about climate change. Perhaps very tough is not an adequate phrase.

 

[UKSBD]

Hopefully by now people will have started adjusting to living on 80% of wages, just hope they will adjust when the next step happens because I suspect a lot of people are going to be working 2 or 3 day weeks for a long time.

 

[Paul Norman]

I think there is going to be a massive change in people's behaviour. I cannot see pubs and restaurants getting going in any meaningful way if 2 metre social distancing is required as they just will not be able to get the customer numbers they need to survive (quite apart from the impossibility of their staff maintaining a social distance. If it isn't required and people currently believe that it is necessary, a lot of people will not go because they won't trust the relaxation of controls. So a huge sector with little chance of survival.

Then you have all the people who have realised that you do not need to go shopping and spending every day, so the High Street will suffer even further, even if online shopping survives.

Separately, I reckon there will be at least 6 million unemployed. Which takes a huge chunk of disposable income out of the economy.

I think it is going to get very tough. Then there is Brexit and the need to do something about climate change. Perhaps very tough is not an adequate phrase.

I agree with the probably unemployment number. And, assuming that those unemployed find it difficult to get job seekers allowance - the job centres will simply not be able to process those volumes, and sanctions will be handed out liberally, as before, large numbers of those unemployed will be getting into serious personal debt.

If we are not prepared to cope with this in a more positive, and even handed, way than before people will die of starvation.

We also have to address the issue of inflation - that is likely to be considerably higher than we are used to seeing.

 

[Paul Norman]

Some small businesses will, of course, be able to cope with the recession better than many larger ones.

And some of us will have lower costs - no offices, no commuting - than before.

But it is going to get competitive out there.

 

[Mr D]

Very little attention is being paid to this and you would have it expected it to be mentioned more on here.
It is highly likely as we exit from this horrendous mess that we will see a massive downturn
How are people preparing for this . ?
Will the extra borrowings that companies are taking on actually put the business in difficulty due to the large loans that are being offered.
Is your business ready to fight in the trenches ?

Preparing for it?

Been spending a lot on buying new stock. Planning on doubling the business in size by end of summer from what it was by start of the year.

Got several ideas being worked on, hopefully the first will be in place before end of the year if I can solve a minor technical issue.

Recession allows for growth.

 

[The Byre]

I always knew this was coming. We have been preparing for a recession since 1995. I thought the 2007-10 crisis was it, but the world scraped its' arse through that one.

As a result of my conviction that either a deep recession or even a prolonged depression was inevitable, I have had to avoid growth and garner equity. We now have no meaningful overheads such as superfluous staff or debt repayments. Prior to this nonsense, I pulled out of some businesses and cashed in my chips in 2018 so that we had enough money to weather any coming storm.

We have sources of revenue that are more or less constant and that allows us to keep the place ticking over and gives us something to do.

But now is far too early to plan for expansion after the crisis is over.

 

[BristolBiz]

We barely noticed the last economic crash, luckily. No business borrowings and buying instead of leasing helped, so fixed costs could be kept as low as possible.

This one may be different, but we will do what we always do - cut our cloth accordingly and try to maintain a profitable model at whatever scale our market allows.

 

[The Byre]

I think it is going to get very tough. Then there is Brexit and the need to do something about climate change. Perhaps very tough is not an adequate phrase.

You forgot the collapse of the oil price and the $250 trillion debt that is ricocheting around the financial markets! When that particular game of musical chairs stops, that's when it will get really interesting!

 

[Paul Norman]

We barely noticed the last economic crash, luckily. No business borrowings and buying instead of leasing helped, so fixed costs could be kept as low as possible.

This one may be different, but we will do what we always do - cut our cloth accordingly and try to maintain a profitable model at whatever scale our market allows.

The last economic crash took our economy back a handful of percentage points. Currently, economists are opening talking about a 30% hit on the GDPR. The last crash was just a warm up.

 

[thetiger2015]

Hopefully by now people will have started adjusting to living on 80% of wages, just hope they will adjust when the next step happens because I suspect a lot of people are going to be working 2 or 3 day weeks for a long time.

It's easy enough to live on the 80%....when you have reduced outgoings by...not going out. Will definitely be interesting to see what happens with part-time working or when the furlough payments stop at the end of the year.

It's going to take a few months before we see the true impact.

There are some positives from this though. Apparently cruise operators have seen a huge increase in bookings, even compared to last year. Also, holiday companies in general are expecting a massive influx of bookings when people are allowed to move around. There are also people who need to see family overseas, they'll be among the first to book tickets.

 

[Mark T Jones]

It's easy enough to live on the 80%....when you have reduced outgoings by...not going out. Will definitely be interesting to see what happens with part-time working or when the furlough payments stop at the end of the year.

It's going to take a few months before we see the true impact.

There are some positives from this though. Apparently cruise operators have seen a huge increase in bookings, even compared to last year. Also, holiday companies in general are expecting a massive influx of bookings when people are allowed to move around. There are also people who need to see family overseas, they'll be among the first to book tickets.

my guess is that there will be a ‘dead cat bounce’ particularly within the hospitality sector - hence recession might not actually hit until 2021

unfortunately whilst lockdown and QE will trigger the recession the -eminently sensible - precautions of cutting costs, reducing headcount, de-stocking etc will feed it.

 

[Mr D]

my guess is that there will be a ‘dead cat bounce’ particularly within the hospitality sector - hence recession might not actually hit until 2021

unfortunately whilst lockdown and QE will trigger the recession the -eminently sensible - precautions of cutting costs, reducing headcount, de-stocking etc will feed it.

The media also tend to feed a recession, making people less likely to spend but instead save or reduce outgoings.

 

[MBE2017]

A leaked report from the Gov supposedly expects up to 30% of companies to close their doors, not looking good.

 

[Deleted member 59730]

Looking back at recent recessions doesn't help much. Try looking back to the period after WW2. Massive numbers out of work, devastated factories, low wages etc etc. Yet the people were unbelievably happy, took holidays for the first time, expected and got a better standard of living.

 

[The Soup Dragon]

A leaked report from the Gov supposedly expects up to 30% of companies to close their doors, not looking good.

Leaked from where?

 

[alan1302]

Leaked from where?

A leaked report from the government probably was leaked from the government.

 

[The Soup Dragon]

A leaked report from the government probably was leaked from the government.

leaked to where any link?

 

[alan1302]

MBE2017 will be able to tell us.

 

[thetiger2015]

Looking back at recent recessions doesn't help much. Try looking back to the period after WW2. Massive numbers out of work, devastated factories, low wages etc etc. Yet the people were unbelievably happy, took holidays for the first time, expected and got a better standard of living.

Difficult to compare with that time though. There'd just been 6 years of people being bombed and children cast off in to the wilderness, not knowing if they'd ever see family again.

Different world to now. We had more industry then. Less access to media. Moving around the country wasn't widespread, most people stayed within their own towns.

The economy we live in now is vastly more complex and very credit dependent. Almost everyone has some sort of debt - mortgage/car leasing/hp <<< all reliant on a job.

 

[Interestedobserver]

I've also read the suggestion on BBC that entire industry sectors may end up being sacrificed

 

[Interestedobserver]

Laura Kunesburg BBC:

"There are also fears among some ministers about how extending the scheme for every part of the economy reduces the incentive for people to go back to work and businesses to reopen too.

But, in the months to come, the question for the government is likely to extend far beyond the dilemmas over furlough.

More broadly, they may have to consider which sectors of the economy do they ask the taxpayer to help preserve, and which do they let go?

In this emergency phase, we are living with an astonishing level of state support being lent to keep big swathes of the economy afloat.

This chancellor and this Tory government are prepared to wear massive levels of borrowing for the foreseeable future. There will, in time, be a limit and an end point to how much more to add.

But many industries' models may not work for a long time; the sums may simply not add up.

Rishi Sunak may therefore have to decide whether it's the right thing to keep propping up business and industries whose future after corona may not be viable.

That's not just a decision about what we need, and how we want to earn our living as a country in the future, but a series of political choices about what the economy ought to look like in the years to come."

 

[Mr D]

I've also read the suggestion on BBC that entire industry sectors may end up being sacrificed

In which case a few smart people will see a gap in the market and start up in those industry sectors.

With new places, ways of working, operations etc.

 

[MBE2017]

I read the 30% leaked report first about 11pm, no source I can remember since I had been up for approx 48hrs straight. There are various articles in the papers along the same lines, and as above various industries which might end up being sacrificed long term.

I expect the source will resurface, but not being a tv watcher, I visit many news and other websites. This report was from a news site, but I forget which now I have slept.

 

[gpietersz]

Its clear things will change, but its very hard to predict how. Will people keep working from home, educating from home, keeping social distancing etc. after they no longer have to?

Then there are political decisions. Not just lockdown rules, but economic trade off such as whether the government will be willing to tolerate inflation if that is a result of continuing to pump money into the economy (I know its not what is expected in the short term, but later on if you keep on doing it its going to happen), or whether borrowing will be paid though higher taxes, renewed austerity or printing money.

 

[Interestedobserver]

In which case a few smart people will see a gap in the market and start up in those industry sectors.

With new places, ways of working, operations etc.

Yep for sure. Outdoor urban type pubs and bars will come in to fashion. For example.

 

[Bluejen84]

I've also read the suggestion on BBC that entire industry sectors may end up being sacrificed

Well yes. Any very sociable business will struggle. I had a soft play. Now I don't.

 

[Interestedobserver]

Well yes. Any very sociable business will struggle. I had a soft play. Now I don't.

Kids will still need to play. Will just need different environments

 

[Mr D]

Yep for sure. Outdoor urban type pubs and bars will come in to fashion. For example.

Maybe not outdoor. But set up in different buildings that have lower rent and rates.

 

[Clinton]

I think it is going to get very tough. Then there is Brexit ....

Ah, Brexit. Hopefully a clean Brexit at the end of this year with no more pussyfooting around, no more extending.

We then won't have to contribute to the rebuilding of southern EU states / states mostly badly hit by coronavirus, we can focus on our own problems.

More than that, we won't need to contribute to the EU budget - there's tens of billions saved there! C'mon even Remainers must see that this is good news.

Even better, we'll be free to do our own thing - for example, state subsidies for businesses (without a stifling EU rule that any business that made a loss in the last financial year shouldn't get state support). But whether you agree with subsidies or not, it'll be our government that decides these things, decides in Britain's interests, not that of France's or Belgium's or Spain's.

Best of all, we can made radical changes to kick start our economy without being told we can't do this and can't lower the VAT on that. We can cut corporation tax to below Ireland's and get a swarm of large corporates moving to the UK to generate employment and pay billions in tax. We can do lots of other stuff that we can't do now.

Covid-19 is costing us less than it's costing other G7 countries. I know, I know, Sunak went a bit crazy with throwing cash about. Yet we're spending way below what Japan, the US etc are spending (as a percentage of GDP)!

So we're better placed to recover from the coming recession.

Brexit's the silver lining. This recession could be a lot worse without that.

 

[The Soup Dragon]

Ah, Brexit. Hopefully a clean Brexit at the end of this year with no more pussyfooting around, no more extending.

We then won't have to contribute to the rebuilding of southern EU states / states mostly badly hit by coronavirus, we can focus on our own problems.

More than that, we won't need to contribute to the EU budget - there's tens of billions saved there! C'mon even Remainers must see that this is good news.

Even better, we'll be free to do our own thing - for example, state subsidies for businesses (without a stifling EU rule that any business that made a loss in the last financial year shouldn't get state support). But whether you agree with subsidies or not, it'll be our government that decides these things, decides in Britain's interests, not that of France's or Belgium's or Spain's.

Best of all, we can made radical changes to kick start our economy without being told we can't do this and can't lower the VAT on that. We can cut corporation tax to below Ireland's and get a swarm of large corporates moving to the UK to generate employment and pay billions in tax. We can do lots of other stuff that we can't do now.

Covid-19 is costing us less than it's costing other G7 countries. I know, I know, Sunak went a bit crazy with throwing cash about. Yet we're spending way below what Japan, the US etc are spending (as a percentage of GDP)!

So we're better placed to recover from the coming recession.

Brexit's the silver lining. This recession could be a lot worse without that.

I love your optimism

and chlorinated chicken for all