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More doom and gloom – recession is coming June 8, 2008

Posted by Al in : personal,politics , trackback

I’d love to disagree with this article from the Guardian and say that the world is going to be OK, we’ll all have jobs and money this time next year and not to worry – but I can’t. I’ve been seeing signs of purse strings tightening for a while, and I keep hearing of more doom and gloom by the day.

My fiancee has a Chinese restaurant in a slightly poorer area of town – which is actually a good place to sell fast food. The restaurant does OK, quiet in the week and busy on the weekends, but recently the weekends have not been as busy as they used to be and week nights are also quieter. The food’s the same and the same people are still living here, but luxuries like a Chinese takeaway are not very high on people’s lists of priorities any more. I was speaking to a lorry driver recently, and he mentioned that his firm have just sold off a quarter of their lorries and laid of the drivers as well. The lorries were relatively new, and that’s a big investment to lay off, more along the lines of taking a relatively small loss now to prevent a larger loss in the future. The company just cannot see any work for those vehicles over the next couple of years – mainly because the housing market is slumping.

There are a lot of builders, scaffolders and other tradesman living in our area, and they’re all saying that work is not as regular as it was, and the money just isn’t there either. If these guys aren’t earning the money then they’re not spending it in restaurants, pubs, cinemas, shops or anywhere else. If the money isn’t being spent then businesses lay people off or shut completely, so lessening the amount of spending money available. It’s a downward spiral that looks to be just starting to pick up speed at the moment. According to Deloitte house prices could drop by 20% over the next 18 months, and “The UK economy is on course for a very deep and prolonged economic downturn, if not an outright recession.”

I doubt there’s anything you or I could do about this, but there are some steps we could take that would make a difference. Most importantly don’t stop spending, just spend wisely. Buy what you need and try to enjoy a little luxury every now and then – but spend your money in local businesses and not in the supermarket. If any business can weather a recession it’s a giant supermarket chain, whereas local businesses can often be teetering on the brink of collapse, which would just add to our problems. Now, more than ever, where you spend your money could make a big difference.

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