I am very out of the loop with economy and politics but the economic crisis is slowly taking its toll and I wondered what the likelihood of seeing the end soon is.
Is this like the ’08 recession even though we aren’t technically in a recession? What difference does it make being in a recession and not?
Is it ever likely to get better? If so, realistically, when?
In: 2
Other comments did a good job explaining how it’s different from 08, so gonna focus on the other questions. i’m not an expert so please correct me.
*What difference does it make being in a recession, and not?*
Let’s break down the basics of an economy.
An economy is very much based on giving and taking. It functions on people contributing to the economy, and the economy giving back to people.
In practice, “contributing to the economy” is earning a wage, paying taxes and bills, and buying products.
1. Earning a wage relies on stable employment. People have to want to work, be able to work and feel their work is valuable.
2. Paying taxes and bills relies on people earning money to make a living and contribute to the Government and electric, public service and water industries.
3. Buying products relies on having enough of a wage from work and taxes, to contribute to industries. These products can be human needs, like food industries. Or from markets such as fashion markets.
It gets slightly more complicated however, as a stable economy is a balanced economy.
If people spend too much, prices rise, money loses its worth.
If people spend too little, industries and markets suffer.
People are currently spending too much. When people buy buy buy buy. Industries increase their prices, so that there is enough to go around (supply) As things get more expensive, the pound gets less valuable. The Government needs to lend more money, pay their workers more. Bad bad news for the economy.
So currently the goal is to lower people’s spending, by increasing interest rates, making it harder to take out money.
This has a negative impact on the consumer and the industries. People don’t have enough money to spend on industries which can then lead to a recession. When industries and markets struggle to survive and are forced to lower prices.
When will this end? Economists predict interest rates will continue to increase until 2024. Which could possibly dip the UK into a recession. Not enough money to spend on things.
Some argue recession is inevitable at this point.
Some argue there is still hope.
The future is uncertain.
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