Explaining recession

Generali

globalds wrote: »

So which sector in the UK has the kind of shaky businesses that will go to the wall ...I'm thinking Banking and Northern rock type companies .
It can't be manufacturing ..There doesn't seem to be much of it left .

The likes of Paragon etc. There's plenty of retailers that are clinging on too. Sad to say that many 'Mom and Pop stores' are running on very tight margins.

Then there's a lot of builders and other companies that have over extended themselves with their borrowing.

Manufacturing is bigger than you'd think in this country. About 35% of private sector employees work in manufacturing.

The weakest finances in this country seem to be those of the UK govt. Merv warned the govt yet again that their borrowing was out of control. I suspect that any nasty recession will see a forced cut in UK Govt borrowing as they simply can't continue to borrow increasing sums. Not a good time to rely on a state pension I suspect.

Generali

Doozergirl wrote: »

It was only a kiss!! Albeit quite a passionate one :rotfl:

I need a lie down! Mrs Generali's away for the night too.

epz_2

globalds wrote: »

So which sector in the UK has the kind of shaky businesses that will go to the wall ...I'm thinking Banking and Northern rock type companies .
It can't be manufacturing ..There doesn't seem to be much of it left .

the public sector lol, its the biggest industry going thanks to the tax happy gordon.

seriously though, less people working and spending means less tax income so they will need to start outsourcing work as they cant negotiate pay since they basicly just chucked a bucket of cash at their workers over the last 10 years hopeing they would get better and cant cut the wages now.

Generali

Oh and another thought. There's a big class of companies waiting to go bust: over-borrowed BTLers.

They may think of themselves as investors but they're running businesses and as they have debt to service, cashflow is as important to them as any other business.

seven-day-weekend

Would it have much effect on my son who has no mortgage or debt and works in a Clearance Matalan??? I'd have thought shops like these would have MORE customers!

Generali

seven-day-weekend wrote: »

Would it have much effect on my son who has no mortgage or debt and works in a Clearance Matalan??? I'd have thought shops like these would have MORE customers!

No debt is good and retail is a sector, while likely to suffer quite badly from any recession, tends to have high staff turnover which means that there are generally plenty of opportunities if he does lose his job.

Generally speaking, the middle market does best in recessions from rich people cutting back but people also wanting to buy stuff they think will last.

Austin Reed was always a good bet (according to lore anyway, not done the research). What's the first thing a man buys when he loses his job? A suit.

Stephen_Leak

A recession is when someone you know loses their job. A depression is when you lose your job.

fc123

marc5180 wrote: »

what effect would it have on us though

That dependes on what sector you work in....there is a trickle down effect...as one sector cuts back spending, the reduction trickles down to the one under and so on...in the end it affects pretty much most industries / businesses....unless they are bailiifs /pawnbrokers.....but even the pawn broker has to find a customer to sell the pawned goods to.

Early 20 somethings won't notice it too much as the current economic climate is just the one they know. It is "normal". We set up our business in 1987 and opened our 1st store (it was a big one too...when I think back to the risk :eek: but we didn't have much to lose...just an LA high rise) in 1990.......and it did really well; but we had no "boom" figures to compare it too. It was also normal not to be able to borrow much money. We turned over 200k in our 1st yr yet the bank only lent us £1500 towards the venture and we could only ever have an overdraft of £500.

30 somethings (child free ones mostly) may be in for a bit of a shock. A choice of 3 or more job offers, easy credit; 1 call and a card with 3 grand on it arrives a couple of days later, being used to being paid well for your work. Salaries that are adequate to eat out, go out and have 3 hols per yr and service the interest/ pay rent on a flat.

40 somethings; we are vulnerable as we have more to lose and some of us are more set in our ways/ careers. Some have fat savings but these can vanish pretty quickly over time if one is laid off or ones business is no longer viable.

50/60+ can't answer that one

70+ my parents generation...probably fine as if they need to pull back, they will recall tips from their childhood during the war. My dear dad has decided to dig up his garden + grow veg again plus lost nothing in all the recent stockmarket turmoil as he has many yrs exp of these things.

We have 4 staff from a well known investment ban in the offices upstairs. They moved in 3 yrs back and the company spent 250k on fitting it out for them. A same size office upstairs houses a company with 50 staff.

They have been pacing and smoking outside.......and talking loudly.:cool:

Me, chic boutique owner, has been trying to eavesdrop on their conversations (purely for my own research purposes as I feel that we are on the WRONG side of the line should the recession deepen) which means me going outside and pretending to check my displays.

One of them (30 something) butted in on a couple of customers and the conversation ran as follows;



"yah yah, the screens are red gosh this terrrible, yah yah. But I'm OK as I am Mr Smart....yah yah, don't spend any money gals, haw, haw, this is going to be massssive, but I'm alright because I'm Sooooo smart.
Remember, just batten down the hatches, don't spend any money, haw haw...don't buy that bag..hah de hah....and so he went on (and the customer slid the bag back onto the display) + on + on....until I just HAD to butt in (oh so politely) to say that I wouldn't have a business if a chunk of my customer base stop buying....so could he please Shut Up (said even more politely with a soft smile).........

He replied "aaghh, yah yah, but if a few shops go down, that's the price...you will just have to reduce your prices ....Haw Haw...as he smiled smugly at the girls pleased with this pearl of wisdom........"but I won't make the margin to cover my overheads so that's not a solution" I replied.

and I got a blank look......followed by "well, yaah.
, must go back to the office and save the economy for this lady...haw haw, yah yah".
:mad:

I recall 2 tales from the last recession which I may post later if have time.

If people are unable to raise finance or are feeling insecure about their incomes, then they can't benefit from the sales of reposessed homes, boats, cars etc. Falling prices are accompanied by other not so nice things too.

The people with cash and no debt at all are the ones that can clean up.

lynzpower

seven-day-weekend wrote: »

Would it have much effect on my son who has no mortgage or debt and works in a Clearance Matalan??? I'd have thought shops like these would have MORE customers!

Is it the one in North London

The thing is, with these sorts of shops, they'll have a large amount of square footage in prime areas. Commercial rents have been rising anyway, leading to the clone of the UK high street, but in real recession, things will be reviewed.

People spend less on unneccesary stuff - lower income for the retailer

Prices of overheads are high and getting higher ( eg electricity, premises utilities, some taxes might rise too etc) Some retailers vanish, or certainly downscale.

My father works in wholesaling of fruit & veg. and he was laid off in the last recession, unheard of in his trade. Youd think hed be immune, after all, we all will buy food. But lots of the custom in the trade is resturaunts & hotels, and when people spend less on leisure, the domino effect can be massive.

I dont think anyone is immune from job insecurity of consumers spending less. Its what we all rely on, ultimately.

ManAtHome

lynzpower wrote: »

and when people spend less on leisure, the domino effect can be massive.

Too true - certainly what happened in the early 90s - non-essential retail (furniture and clothing) normally get hit first. Unfortunately since the last one, manufacturing has gone down and consumption (public sector, retail, and finance) has gone up - bigger dominoes...