A bit of good news..?

Realy

pickles110564 wrote: »

Not a chance they have tried to keep it at 2% and failed miserabley, inflation will hit 6.5% by Jan, unemployment will hit 3.5 Million, interest rate will hit 3.5% but this will still not be passed on to mortgage holders.
Nothing good coming up for ages but hopefully Ipswich will have sacked the tinkerman by Christmas.

Just quoting the news, with comodties tanking and oil off a cliff what else is going to keep prices up in a recession?

sdooley

Realy wrote: »

Just quoting the news, with comodties tanking and oil off a cliff what else is going to keep prices up in a recession?

Big cuts in capex mean that stocks will be run down, but companies will avoid laying off staff if they can. Having to pay workers while producing less and paying higher financing costs would require either a cut in wages (generally impossible) or an increase in prices.

Some companies won't be able to force through an increase in prices and will go to the wall. The survivors will have no choice but to raise prices to cover their fixed costs on lower volumes.

WTF?_2

Realy wrote: »

Just quoting the news, with comodties tanking and oil off a cliff what else is going to keep prices up in a recession?

A good old fashioned Sterling Crisis would see quite a bit of upward pressure on prices irrespective of cheapening commodities generally.

Taking on all this public debt (with the implication that the government will have to sell lots of new Sterling bonds) doesn't do much for the strength of the currency longer term. Though of course, lots of other major currencies may be in the same boat.

WTF?_2

sdooley wrote: »

Big cuts in capex mean that stocks will be run down, but companies will avoid laying off staff if they can. Having to pay workers while producing less and paying higher financing costs would require either a cut in wages (generally impossible) or an increase in prices.

Some companies won't be able to force through an increase in prices and will go to the wall. The survivors will have no choice but to raise prices to cover their fixed costs on lower volumes.

Huh? I would have thought that the idea was to cut costs by laying off as many workers as you can get away with and screwing productivity increases out of the remaining workforce whilst using the threat of further redundancies to keep wages down. That's how it worked last recession, anyway.

With lots of unemployed people around, you can also offer much lower wages when you recruit.

And this time around we have well developed globalisation meaning that there is competition for work from people overseas.

neverdespairgirl

Realy wrote: »

I think this year it is bad new for them but inflation is predicted by some to be well below 2% this time next year.

I'm sceptical. Inflation's been above 2% for ages, even on the fiddled stats, and it's been said by the MPC every month for years that it'll be below 2% any minute now....

neverdespairgirl

Cannon_Fodder wrote: »

At 2.6% average for 3 years, the Police let the Govt off lightly...and the Govt will hold that example up to the rest of the Public Sector, as unfair to the Police if other groups wish to pursue more...

Especially as the govt. screwed them royally last year.

Realy

neverdespairgirl wrote: »

I'm sceptical. Inflation's been above 2% for ages, even on the fiddled stats, and it's been said by the MPC every month for years that it'll be below 2% any minute now....

I am only the messenger, but in truth I can't see inflation being 6 % next year I think it will be a lot nearer 2%

Inflation I would say as been consistantly over 2% for the last two years (but only 2%+ over recently) but you could argue that coincides with fuel price increases.

dougk_2

If the government move the goalposts again and include house prices in the inflation figure its probably under 2% already. Given the drop in oil prices the last 3 weeks or so and food prices dropping and by the end of the year inflation will be back to 2%.

I don't believe house prices will drop overall more than 30-35%.

Builders and tradesmen it seems are still busy (have you tried to get one?) as people are repairing, expanding properties and making good rather than moving. Yes construction companies and new buildings are going and people are not buying so many new items, but things still need keeping in working order.

Generali

The most normal way that wages fall during a recession is that older, more expensive staff are laid off whilst the cheaper, younger people are kept. The older people then face a choice - take a pay cut to get a new job or sit on the dole with their skills gradually becoming more out of date. The guys left behind often, as !!!!!! says, find themselves doing extra work.

I've seen 2 lots of tough times in my industry and in that time back office bankers have gone from doing pretty much 9am-5pm to working a basic day of 8am-6pm and often much longer. That'll be pushed out to 6.30 or 7pm with this recession I guess.

If things get really severe then some bosses might engage in a little (probably illegal) workplace bidding, asking you how much you'd be prepared to do your job for and taking the lowest bids.

I'd be very surprised if CPI is above target in a year. I reckon the odds are around 2-1 that we'll have deflation in 12 months time. After that we'll see what impact printing all this money has. My suspicion is very little as I think the velocity of money circulating is falling fast as banks (and probably companies and people too soon) hoard cash.

carolt

Realy wrote: »

But you can't base the UK economy on what you do.
I am just saying how the economy works in general.

What happened the last 10 years and what is happening now is a prime example is it not?

I don't think I'm atypical - recent retail sales figures show I'm clearly not alone.

Hoarding cash rather than spending it was precisely the problem they faced in Japan during their Lost Decade.

Or how about this for more anecdotal:

http://www.mumsnet.com/Talk/1372/625535?discoday=hp&rn=1224025323631

I'm clearly not the only one worrying and preparing to batten down the hatches, if necessary.