If The UK Goes Into Recession, What Happens To Me?

According to The Economist, Europe is headed for a recession. Russia's war on Ukraine, a slow recovery from the pandemic and a harsh drought have had a knock-on effect on our economic future.

Britain in particular faces a crisis, with slow growth and weak pound, and naturally, it's got many of us worried about what will happen to our jobs and prospects. Inflation is continuing to soar, and the increasing cost of living has got many students and households across the country worried. As a result, some experts are predicting another recession.

So, what is a recession, why is it happening, what could it mean for you and how can you offset the rising costs of living? Read on to find out.

Want to dive deeper into issues surrounding the UK recession? Get The Economist student discount, an exclusive offer when you sign up for Student Beans.

What is a recession?

Just what is a recession anyway? A recession is a serious decline in economic activity that can last for an undetermined period, from months to years. More specifically, many experts define a recession as two quarters (six months in total) of negative growth in gross domestic product, or GDP.

But what does this mean?

A recession can cause hardship in all kinds of ways, from making it harder to find a job to reducing wages. Many businesses suffer, too, as consumers spend less and sales decline.

What causes a recession?

According to Economics Help, the following factors can cause a recession:

• Financial crisis

• Rising interest rates

• Supply-side shock (rise in oil prices leading to inflation)

• Fiscal austerity (when the government cuts spending)

• War

• Black swan events (hard-to-predict events such as COVID-19).

In terms of what's causing the recession in the UK, there are a variety of factors involved, including but not limited to:

• High cost of living due to factors such as energy price hikes

• COVID-19 post-recovery (or lack of)

• Higher oil and gas prices as a result of the Russian war on Ukraine

• Fall in trading as a result of "No-Deal" Brexit

Why should I worry about a recession?

When economic growth is healthy, there are more job opportunities, consumers spend, businesses thrive…you name it.

But when a recession happens, the reverse happens too. This will cause times of uncertainty, which is why it's important to understand how a recession can affect you personally.

Will there be another UK recession?

Low economic growth has been an issue in Britain for quite some time. So it's inevitable that a recession has been looming.

S&P Global Ratings says the UK economy is already in recession and the British Chambers of Commerce (BCC) expects the UK's inflation to spike to 14%, withnd lingering weakness in growth into 2024. That's potentially a recession in Britain that lasts more than two years.

They've stated the following things to expect, as a result of COVID-19 and the war in Ukraine:

• Rising energy costs

• A decline in household spending

• Weaker export prospects

• Poor investment conditions

• Weaker business confidence and lack of cash flow

What would a recession mean for you?

Besides a rise in costs, there are a few things that might be a cause for concern. Plus, the duration and severity of a recession is unpredictable.

So what does this mean for you?

Job losses may happen

There is the chance of job losses, as businesses are going to do what they can to keep afloat. For context, the UK's 2008 recession saw unemployment levels peak at 10%. It's hard to determine what this will be in the upcoming months and years.

Wages may not cover everything you need

Current wages are proving to not cover most of our everyday essentials, so you may feel your budget does not stretch as much as it used to.

If you were in a position where you could save some cash during the pandemic, now is the chance to make the most of those rainy-day savings. If not, it's always worth speaking to your university advisors about how you can better manage your money, debt, course materials and other concerns related to money during the recession.

It could lead to stagflation

What is stagflation? When the economy is struggling to grow at the same time as there is high inflation there is a situation called stagflation.

For you, that means rising costs at a time of mass unemployment which can cause some anxieties around the cost of living and learning.

What can I do?

During times of uncertainty, the thought of keeping your head above water can be quite tough. Here are some ways you can help yourself offset the rising costs of an impending recession:

Cut costs where possible

We know this can be easier said than done, but even just shaving off a few pounds can add up and make a difference. Such as:

• Skipping Christmas gifts

• Downloading low-cost meals and food waste apps like Too Good To Go

• Cancelling subscriptions you rarely use

• Buying whole instead of pre-cut food and in buying in bulk

Read more in our post on 21 hacks that can save you money.

Start a side hustle

Side hustles are a great way to earn cash on the side, and potentially earn a full career if you enjoy it. There are absolutely tons of side hustle ideas for students, but we've hand-picked a few to get you started.

Side hustles with the most opportunity include:

• Creating personalised items

• Translation

• Mobile app creation

• Writing

• Content creation

• Influencer marketing.

If you feel like you need more experience but can't afford to intern, there are tons of opportunities to do this. You can offer to do the work remotely, take a sandwich year, see what part-time jobs there are in your area or volunteer for a set number of hours based on your availability.

Reduce your energy usage

This is going to be a big one for everybody. By reducing your energy usage, you reduce your monthly bill. Here are ways to save on your energy bills:

• Try switching to the cheapest energy provider for students

• Watch how you pack food in the fridge. Don't overload it!

• Use other methods to cook food, such as an air fryer or slow cooker, which use less energy than an oven

• Turn appliances off from the socket to save yourself from unnecessary usage.

We understand this is a tough time for many, so we'll be updating you on our blog with ways to save money and get through the recession as a student. Want to keep up with the news surrounding the UK recession? Get The Economist student discount when you sign up to Student Beans to keep up with accurate and fact-checked news, including their Recession watch content hub.