IS THE ECONOMY GOING INTO RECESSION?
 

A serious question from me for once.

Although Gordon brown is regarded in certain circles as the most succesful chancellor of recent times (say the last 8 years or so) without writing a huge missive about the UK economy being kept afloat over the past few years by the house price boom, which led to a general feelgood factor, record consumer credit and borrowings keeping retail sales high etc. etc.

I would be very interested in the informed opinion of people here involved in different sectors of business and commerce throughout the country.

My own personal opinion is that i am seeing signs in different areas that we already have a recession underway, rather than a slight downturn; but doubt that it will be broadcast news until 2006.

Why do i make such a statement. I have ran my own business for 20 years and seen the boom and bust cycle before and similar signs exist. We do work for a very wide cross section of business's from govt. depts, manufacturing industry (whats left of it) service industry, legal and finnancial sectors, entertainment etc. so act as a reasonable barometer.

Its not just my business but also members of our trade association throughout the country are reporting a general downturn in trade, quite significant in some cases throughout 2005. In fact when i hear other peoples accounts i'm actually rather pleased that we are fareing much better than most.

In addition debtors are trying to hang on to MY money longer, and i'm hearing of an increase in liquidations and redundancies; or just job uncertainty.

Without wishing to be the harbinger of doom i would be extremely interested in others opinions.

Every year i always prepare optimistic, realistic and pessimistic budgets and am just trying to polish my crystal balls.:o

in a word no.

i can write down a load of stuff as to why, but the overriding factor at the moment is sustainable low interest rates.

Hi Shaun,

I'd have to agree that we're sliding gently towards a recession, but there's so many with a vested interest in denying it that it's unlikely to be accepted for a while yet.

As you say, Big Bad Gordon's made his name off the back of many supporting factors, and been lucky enough to be chancellor during a period when doing nothing would have resulted in a similar period of prosperity.

From a personal level I'm still stunned by the scale of the debt many friends/family have landed themselves in recently, and I've also been living in a house that my landlord has been trying to sell for 10 months now at a price that would've seen it go in a week if this was 2003. Neither are great signs.

Having said that, I currently work for a high street retailer and things are very positive. Sales are on the increase (although this is normal for the time of year), and discounting isn't as heavy as I've seen in the recent past. There's no discussion of recession and no cover-up op here, they believe things are still on the up.

If I had to stick my neck on the line I'd say we're in for a long slow recession which won't dig that deep. Everyone still remembers the last very clearly and, hopefully, there are a few more measures in place to try and support the economy in troubled times.

As final word I'd say the most reliable harbinger of doom is the arrival of a seriously over the top car at the top of the food chain. The F40 and Mac F1 did it for the last recession, and I'd say the Bugatti Veyron is likely to herald dark times ahead.

Cheers,

ali

ps: Never listen to anyone from the City. The concept of Recession is treated with the same derision as white socks, asti spumante, and a night on the beer without a lap dance..... :lol:

i dont get it :puzzled:

go on i dare you write a bit more, makes a change form bikes, bikes, bikes, and bikes.


Interesting answer from the High St Ali, thanks, shame certain suspension providers don't share the same positive approach.:lol: oops shouldn't hijack my own thread;)

What is he talking about Dickie?

I would need to say things are sliding downwards also. Upto the end of 2002 my business was really expanding etc, really good stuff.
last year was an average year for my business, but this year I've seen a big downturn in customers and a noticible reduction in expansion from my exisiting customers, some have jacked things in alltogether, some of which have been trading succsefully for many, many years.
Talking to customers etc, all seem to be very unsure of what lies ahead to be honest, and have adjusted there spending etc accordingly.
Not an ideal situation by any means. Hoping things may pickup in the new year now.

[Edited on 20-9-2005 by Red SPS]

[Edited on 20-9-2005 by Red SPS]

This worries me a bit. Loads of folk are walking a fine line and are over committed with mortgages and loans.

The likes of B&Q are moaning that they are seeing the worst sales figures through the doors in years, as are other high street names (Comet & Dixons for example). Is this just scare tactics to make us feel sorry for them??

Is it that people are maxed out on their credit cards and "Ticked" up to the max on loans and remortgages etc having seen large increases in their house values and taken them up to 85%+ whenever possible to fund house improvements, debt consolidation etc etc???

People are now more concious of the interest rates and i know several guys at work who breathed a sigh of relief when they dropped back a 1/4% recently as it gave them a few extra quid to play with as they were maxed out.

People have bought houses when interest rates have been the best for many years and would really struggle to make ends meet if they were to rise (Unless they are on fixed rate deals which can vary in time scale of course)

One mans bad times is anothers good i suppose and the savers would benefit from Interest rate rises??

All complicated stuff, only time will tell..........

I'd say we are on the borders of a recession and that some sectors of the market are in recession. I also have my own business supplying to the Bedding and Furniture manufacturers and some of my customers have been on short time working for the last 2 to 3 months. Sales to alot of my customers are down by 30% or more.

TP/webteam can this post be turned into a poll to get a vote please or am i too late?

Thanks

Too late mate, you need to do it when starting the thread.

:(

I'd say we're in a decline also. Whilst I make no claims to be some economy know-it-all, I can only tell you what I know from my line of business, and it's not been as good as previous years. We specialise in the printing of takeaway menus for shops all over the country (so we're not hit by financial problems in any single part of the country) and we've noticed a decrease in order value. We're still getting the same amount of customers and jobs, but where orders used to be for 20,000 menus, they're now down to 10,000. 50,000 are down to 30,000, etc.

This says to me that as the takeaway need less menus, they're getting less people through their door. And this says that the general public have less dispossable income.

The printing trade has always been one to see the signs of a recession first, and whilst we're still doing OK, we know of lots of other companies that are struggling. Some have already folded.

Not sure where to go on this one, although I'm no financial expert.
Sure there's signs of a slow down, but is that because of the recent few years of huge consumer borrowing which people are now trying to repay (including me!), or are we saving for possible recession?

I certainly don't see it in my industry - engineering design - where we're having to turn down big contracts because there just isn't enough manpower in the country to do the work. We're also taking work AWAY from the low cost centres because our clients are able to fund the UK manhour rates. And this time of year is typically very tough in my field.

I work for a major oil company, 1 of the top 4 in the world. And before you all start, I have nothing to do with fuel, I work sales and marketing for lubricants ... time for a pun or 2.

Joking aside, as in all sales and marketing organisations we gain and lose customers so it can be difficult to say if we are loosing customers due to a recession or not.

But, I work with distributors who buy our lubes and then sell on to all forms of users. Automotive, commercial (truck, bus, plant etc), manufacturing, agricultural etc

Those distributors that are selling the same volume of oil in 2005 as 2004 have kept the level of business but are making lower profits. Those distributors that are trying to maintain their previous year’s average pence per ltr profit margins are loosing business.

Based on the wide spread customer base these distributors deal with I would say that many markets are struggling and if we are not in recession we are very close to one and the slightest thing could trigger it.

I work in Engineering design in the oil and gas field, and generally have found in the past that recessions in this game are 100% out of sync with the general economy, due to long lead times etc.. in other words, when the economy is flying, there's often a shortage of work in this industry... Right now we're busier than ever, there's more work than I can remember in the last 15 years..

I think the high oil price will continue to hammer western economies, maybe not into recession but all energy bills are on the rise and that hurts everyone - businesses and customers

With the high price of crude at the moment, and expected to get higher and stay high for the next 2 years. Any industry linked in to the oil industry and up stream activities (getting the oil out of the ground) will be busy for the near future and will make money hand over fist. If oil companies have upstream operations they are looking at 1 billion profit per month. Check out BP Castrol recent results.

The downside will be the effect on every industry and product that relies on oil or fuel to either "make it or move it". Cost of just about everything will be going up.

I am in a similar area to desmondo...print!!!

Have been desktop publishing for quite a few years now, and deal with quite a few printers around the country. Of late, printers are fighting with knock-down prices to get the jobs on the press - usually at a loss...very grim.

I personally tend to be working longer hours (own business) for less money :(

...just off to cut my wrists now:o

les

[Edited on 20-9-2005 by les996]

Shaun, all the signs in the retail/leisure sector are that consumer confidence is very low, technically we aren't in recession BUT high street spending and retail sales are not increasing and most business would say its not a good year, anyone who increases net profit this year is doing well.

In most retail businesses prices are being driven down by cheap imports from China/taiwan as are margins, this is resulting in manufacturers/distributers and retail only just breaking even at bottom line. Not good and its difficult to consider investing in your business when its like this so long term it doesnt mode well.

Current financial policy from Tony and Gordon seems to consist of keeping economy hanging on purely by house price inflation and borrowing ( currently uk consumer borrowing is highest ever), the reason consumer confidence slipped was because house prices dipped. Gordon needs to fuel bottom end of housing market to keep the money train flowing hence the recent allocation of new house builds,luckily for him we live on an island so houses are at a premium.

long term manufacturing in uk is fooked but hey, why worry so long as your house increases.

we are now just like the US with borrowing habits.

And here is me thinking it was just the nature of capitalism.............BOOM AND BUST. Time for the Revolution folks!!!!!

Car trade is quiet.

Well Sean, i have worked for myself since leaving school and find i'm working harder for less in 2005 !

my feeling is the little bloke on the street is a thing of the past and if you can't comply you will have to shut the doors !

motortrade insurance up from £1200 last year to a wopping £6000 this year with never a claim in the last 20 yrs !
I think the "The BiG wheels" are turning well .
ie TESCO ,Oil companies, and lots of other Big fish.
But i also think that when they realise the LITTLE wheels have stoped. the ressesion will already be here!

I'm in architecture and we have got more work now than at any time in the last two and half years (since i started there). Big projects as well such as a £40million hospital.

Well Shaun (that was the real Shaun and not Shaun's accountant using the BDG ID?:puzzled:) you've opened an interesting discussion here. There are clearly more economists on this thread than you can shake a stick at.

I've seen discussions about recession ever since I started in financial services in 1987. My advice is, don't start worrying about it until you're forced to off load ALL of your toys, including the beer fridge :P:P

... or off load the house and move into the garage with the bikes and the beer fridge :devil::D

Something is very clearly not right with the economy now. It is interesting that you also work with Government departments Shaun as without doubt they have cut spending this year. It started with the announcement of the election which indicated that the election was to be closer fought that it was in the end. But the worrying thing is that since the election Government departments have not got back to the spending that they were this time last year.
The IT industry (hardware manufacturers) has been a very tough place to be since 2000, a year ago things looked to be getting better but when the election was announced and with the likes of HP stuffing the channel through with product that was not selling (as the manufacturer pre order) we saw a lot of out of date product being sold at less than cost over the last couple of months. Now with that stock sold through we are seeing margin recovery as prices rise.

Interesting Ian becasaue most of our work is ultimately funded by the Government!

i am in hard landscaping patios garden paths driveways water features decking etc etc-- there has been a definite downward trend in business in the last summer, we have had less offers of larger jobs above 20k than in previuos years the jobs that we have had we have to do them with a more economic viewpoint i.e using less luxurious materials such as natural stone and hardwoods and having to go for the cheaper options in the way of materials just to get the work- with the housing market slowing down i thought that people would spend money improving what they have instead of totally upgrading to newer/larger properties but this hasnt seemed to be the case -- people seem to be holding on to thier hard earned or simply paying back what credit they have enjoyed over the last few years- any way not been an easy year so far so not looking forward to winter:(-- a lot of trades in the local building industry have also experienced the same

I'm in naval architecture part of a multi-national into hotels, trains, boats etc. They have been selling off bits of the company and laying people off for the last two years to boost share prices. So have the competition. Pensions cut to f**k all. I will be lucky to have a job at the end of the year. I may even have to move from the 620 DD to the 583class:mad:

Economy
 

Due to the way the government twist figures does anyone know the true state of unemployment numbers?
As they seem to be hiden behind disability and the new job seekers allowance etc.
All I can say is our firm (80 million turn over 2004) is finding this year very hard.
Has the so called housing boom been caused by the estimated 1 million asylum seekers and 1.5 million illegal immigrants that need housing? strange that the birth rate amoung the British population is slowing or stagnent but we are still building massive numbers of new homes.:mad:

Recession? Depends where you are in the food chain.

I have worked in the sign industry for 20 years and many of us are struggling to make any sort of profit. Overheads like insurance, rates and power can be crippling as madmav states.

The general trend in wages is down. You only have to look in the papers to see ''ordinary jobs '' paying £12k and managerial jobs paying £15k to realise this. People who already work for larger companies ( Oil etc. )- don't know how lucky they are. I have friends who earn £35k plus index linked pensions etc. who complain!

In small ( Say up to 15 people ) companies many can't afford to contribute to a pension as their wages are so low. This is paving the way for a two tier society in the near future. If wages for the lower paid continue to reduce in real terms they will take full advantage of the credit on offer and it won't take much to tip them over the edge into reposessions and the like.

There , I feel better now that's off my chest :D

888heaven

It's been nice knowing you. I imagine you will be ethnically cleansed within minutes.:devil:

Wear I duz wurk fings r gud rite now
(pretencious waffle follows)

Typically engineering (in my case electronics) is very sensitive to overall market fluctuations, but high technology in the media domain (ok yah daahrlings) is directly linked to advertising which took a huge hit over the last 3-4 years (remember the collapse of ITV digital?), this has recovered recently and has created a wave of investment in this sector (HDTV roll outs accross europe), but this is offset by some serious consolidations by some of the large players. BT, BSKYB, NTL and a number of large european Telco/broadcasters are laying off staff.

These firms don't want to be taken by suprise if the bubble bursts and they seem to think this is possible.

It's no suprise when you see that one of the largest employers in europe and one of the heaviest recruiters is the UK Gov. The public sector is squewing our economic health badly and this cannot continue (someone has to pay all of those salaries, and if the private sector is in trouble Tax revenues will go down, public spending hole anyone?).

The Gov is not certain of our economic health either, anyone heard that the Gov is unlikely to carry out its council tax banding reform?

Any way, time to take my pills...

Rich

Sounds like the Electronic Security sector is one of the exceptions. We've doubled our engineering staff (from 2 to 4) and still have more work than we know what to do with. I suspect a lot of that is driven by insurance companies insisting on certain levels of security cover as house values increase........

Not that I'm complaining........

I think its the real me and not my accountant. I'm not worrying, more a case of finding out if my gut feeling is right.

Previous recession's have always had some benefits as well, weeds out the weaker competition and indeed provides an opportunity to acquire the strugglers.

In addition we do some work for insolvency practicioners and they get busy.....did get worrying once when we had to deliver from one of them to one of our own clients:(

Still prefer the boom times though:D

The feel good factor definately has gone, look at secondhand Ducati prices (and motorcycles generally) :o however it seems to these aged bones like a slow down or soft bump recession. As you say Shaun there can be benefits - especially if you are into the stockmarket which always seems to do well in a recession.

BDG: You'll be wanting to watch this weeks Panorama you will...

http://news.bbc.co.uk/1/hi/programme...ma/4243108.stm

Rich

Shaun,
Start a new thread as a poll then edit your original post to point to that thread.
Could word it as :
Is your glass half empty?
or is your glass half full?

For those of us old enough to remember (or even have a mortgage when) interest rates up around the 14% mark, I think we'd be saying we're not in recession.

Are we heading for recession? I think a lot of people think we are so that's why they're holding onto your money Shaun.

Personally - unless you're prepared to go into politics and try and change the world from there (or perhaps earn some dough for doing sweet FA), then sit back and enjoy the ride.
From recent experience: - tax on your earnings, tax on your living, tax on your death. They gotcha all ways.

Sunny day, get out and ride

If you start a poll Shaun I can merge this thread with the new poll - job done.

Thanks for that, it'll make a change form watching Thomas the tank engine, and my current favourite Duck Dodgers, (thats got some good adult humour buried in it:D)

TP pol coming up thanks.

POLL ON \'IS THE ECONOMY GOING INTO RECESSION?\'
 

This poll is being added to a thread i started yesterday, so many of you may added comments already bbut i'd be very grateful if you still voted as well please.

You never know the DSC may get on Panorama as well:lol:

Thanks

[Edited on 21-9-2005 by BDG]

We have been in a recession for at least a year now, no one wants to use the R word though.
Just look at industry and small business.
All I need is a mini boom to be able to buy a new bike then I would be happy !
K