Tuesday, July 16, 2024
HomeBusinessThriving in Turbulent Times: Steps to Prepare for a Recession

Thriving in Turbulent Times: Steps to Prepare for a Recession


Related stories

Utanmaz Türkler: Exploring Cultural Nuances and Societal Impacts

Introduction "Utanmaz Türkler" translates to "Shameless Turks" in English. This...

Why Trusts Are Key to Wealth Preservation

When it comes to preserving wealth across generations, few...

Gracie Bon: A Rising Star in the Fitness and Wellness Industry

Gracie Bon is a name that has been making...

Dimple Malhan- Personal and Professional life!!

Famous Vlogger recognised for Dimple's Kitchen YouTube channel. She...

People fear recession! But it’s lack of knowledge about the whole thing and how it’s likely to impact our livelihoods and businesses that drive much of this fear. But if you know enough, it’s easier, and you know how to prepare. So, what’s a recession?

For once, let’s not go with the book definition and take a practical perspective. What happens when you don’t have enough money to spend? You cut costs and only spend on necessities! 

When everyone faces such a situation, businesses make less money, causing liquidity problems, and may not have an option but to send some of their workers home or even close down. And since these businesses employ people, people may not have as many job opportunities when they struggle.

During a recession, it’s harder for people to find jobs, and some families might have less money to spend on things they need or want, making it challenging for everyone.

Governments and economists often devise plans to encourage people to spend more money by giving them extra help or lowering taxes. They also try to help businesses by providing support and creating new job opportunities. 

But you may ask, why are the interests up? Many blame the conflict in Ukraine for much of the economic woes. Yet before the Ukraine-Russia invasion, the global economy was in recovery from the COVID-19 pandemic. The higher interest rates had been lowered dramatically in 2020 to cushion economies against the impact of the pandemic. The interests were bound to rise up. So, unless there is a crisis of pandemic proportions, interest rates are unlikely to reach the pandemic lows again in our lifetime.

See also  Oil jumps more than 3% as OPEC+ mulls cuts of up to 1 million bpd By Reuters

Is the UK economy in recession?

The OBR expects the UK economy to shrink but is not predicting falls in two successive three-month periods, which means we are technically avoiding recession. 

It says the economy will grow by 1.8% in 2024, 2.5% in 2025, and 2.1% in 2026. Still, the UK remains the only country in the G7 that’s yet to restore its economy to its pre-pandemic status.

So, we may not be in a recession, but these are in turbulent times, and the following are the signs:

Food and Gas Price Inflation

The UK’s inflation could be higher than other advanced economies, with the country experiencing a spike in gas, food and core prices.

In March 2023, when there were signs of declining inflation across Europe and the US, the 12-month rate of the UK Consumer Prices Index (CPI) and 12-month rate of energy price inflation remained among the highest G7 economies.

But this contrasts with the recent decline in global food commodity prices, as the change lags before price shocks filter through the supply chain.

According to the March 2023 data, UK food price inflation is among the highest across G7 economies, second only to Germany.

So, what tactics can we use to sail upwind effectively? 

Steps to Prepare for a Recession

Recessions and economic booms are like a pattern that keeps repeating. It means that after a good time with a lot of economic growth, there will eventually be a period when things aren’t so good, and the economy slows down. 

So, knowing that there will always be another recession in the future, grown-ups need to prepare for tough times. It’s just a part of being responsible and prepared for whatever might happen in the economy.

See also  On Board: V Anantha Nageswaran takes over as new CEA

Preparing and navigating these difficult times rounds down to using your previous strong position to your benefit. It would help to refocus your spending, readjust your budget to create an emergency fund and eliminate high-interest debts. 

Prepare Your Defences – Check Your Finances

As we already said, a recession brings job losses as companies and businesses scale down operations, which means you could lose your job. So you don’t know how long you’ll be holding onto that job, so your first step should be knowing where you stand regarding finances. 

Don’t Liquidate your investment.

Don’t time the market. You may want to pull out your investment and get back in when things are much better. But the downturn is temporary so the joke will be on you. 

Free Yourself of Debt

Offload expensive debts like credit card loans and any other debts you can, and try to be as debt-free as possible. 

Cash Savings is Gold

All the savings you’ve made will come in handy. As the market comes down, that holiday trip you are planning or the new car you were badly saving for becomes excesses. Since you now only spend on what matters, you can turn those cash savings into an emergency fund.

Create Alternative Income

Perhaps the one reason a recession is the most-dread “R” word in economics is that it leads to layoffs as companies struggle and others close down. 

When facing budget constraints and higher prices for consumer goods, it’s vital to balance cost-cutting measures without adding additional stress. Instead of focusing solely on cutting expenses, consider increasing your income. 

Could stock or forex trading be an option? Of course! Trading may be a high barrier-to-entry profession, but as long as you have ambition and patience, you can trade for a living even with little money. TradingGuide.co.uk, a reliable resource for aspiring traders, can equip you with the knowledge and tools to pursue your trading ambitions. It reviews trading brokers, provides valuable insights and guidance on navigating the trading world, whether you’re looking for a full-time career opportunity, a part-time gig, or a way to generate supplemental income. https://tradingguide.co.uk/awards/trading-platforms/ is a good point to start when picking the right trading broker.

See also  Benefits of Converting Documents to PDF

Some options include working extra hours, negotiating for a raise due to high inflation and a tight job market, selling items you no longer need, or taking on a side gig such as food delivery, tutoring, or running a blog. You could also work freelance at various sites or provide consulting work. The gist of that matter is to have at least two sources of income, and these additional income sources can make a significant difference, potentially boosting your overall financial situation.

Prepare your Offence – Do your SWOT Analysis

During the COVID-19 pandemic, the UK government deregistered about 192,400 businesses, which saw the country’s steepest GDP drop (9.7%) since 1948. Yet over the same period, some companies like FoodHub and Online clothing retailer ASOS grew to become household names in their respective industries. The Amazon CEO and founder, Jeff Bezos, accumulated over $70bn during that period. Yes, like it’s said, when others see it as a problem, some see the opportunity it presents. 

So during the recession, conduct your own SWOT analysis. It’s how you identify what you have, your vulnerabilities, and the threats and opportunities the situation presents. You want to think on your feet because time is of the essence. 

Recession isn’t a bad thing. It’s part of how the economy works, and it happens occasionally but doesn’t last forever. Eventually, things start getting better, and the economy starts growing again.

When you notice things improving, you can seize the opportunity by asking for a more significant role in your current company or seeking a job that could lead to a significant breakthrough, like a career change. Another option is to take a bold step towards becoming an entrepreneur when you see a glimmer of hope amidst the economic challenges.

Bellie Brown
Bellie Brownhttps://businesstimes.org
Hi my lovely readers, I am Bellie brown editor and writer of Businesstimes.org. I write blogs on various niches such as business, technology, lifestyle., health, entertainment, etc as well as manage the daily reports of the website. I am very addicted to my work which makes me keen on reading and writing on the very latest and trending topics. One can check my more writings by visiting Cleartips.net

Latest stories