Finding opportunity in the UK financial landscape

Amidst the recent news of the UK entering a recession, it’s natural to reflect on past economic challenges. 

The second-half contraction in the UK economy during 2023, as reported by the Office for National Statistics (ONS), raises concerns. 

However, within these challenging times, there may be a glimmer of hope to be discovered and opportunities to be uncovered. 

What has happened?

The economy shrank 0.3% in the final three months of 2023, according to the Office for National Statistics. This means the UK tipped into a recession, defined as two or more quarters of falling Gross Domestic Product (GDP) the value of goods and services produced.

It looks as though the medicine used by the Bank of England to counter inflation – increased bank rates – may have proved a little too strong for the patient.

With high inflation and higher mortgage repayments to deal with, it seems we have stopped the spending that was funding growth. 

What does this mean for your money?

Some of the previous recessions have brought economic misery with job losses as companies cut their costs. Earnings stagnate and debt and arrears soar, with defaults on loans and mortgages, repossessions, and bankruptcies.

But this time, the effects may be mild. There has been no overnight economic crash, no run on the banks, and no market turmoil. The FTSE seems to be taking the news in its stride.

Bank of England Governor Andrew Bailey has signalled his opinion that a recession would likely be brief, telling a Lords committee that the UK economy may already be starting to pick up again.

With a general election on the way, the government will be keen to minimise the impact of any recession on voters. Expect expressions of optimism, with talk of ‘growth stagnation’ rather than ‘recession.’

But there may be some more practical moves – which could be positive for your own financial outlook.

So, what is the good news?

Chancellor Jeremy Hunt said low economic growth is “not a surprise” but added that the UK must “stick to the plan – cutting taxes on work and business to build a stronger economy”.

So, despite the fact that there may be less cash in the Treasury coffers than he anticipated, there could still be scope for a tax cut in the March budget.  It might prove a vote winner for his government on the eve of an election.

A reduction in income tax, corporation tax, stamp duty or inheritance tax might all be considered to stimulate the economy out of recession.

What’s more with the economy in recession, there should be little appetite for interest rate rises.  With UK inflation holding steady at 4% at last, the next change in bank interest could be downwards. The Bank of England is already indicating it’s a case of when, not if, a reduction will come, however, they are not guaranteeing that this will happen as soon as inflation hits 2pc.

What should you do?

All economies go through cycles of expansion and contraction. This downturn may not be deep or prolonged, but jobs can be lost, and businesses can struggle.  Putting aside three to six months’ worth of your average spending could provide a useful emergency fund.

It could be time to look at your insurance protection. It is possible to arrange cover which is designed  to pay out in the event of job loss, but you need to arrange it before any signs that your employer is in trouble.

You might want to look at your investments, including your pension. An economic downturn calls for a diversified portfolio, which means having a financial portfolio that supports the swings of the economic cycle. 

A change in the economic weather, a possible fall in interest rate, and a need to check your family’s safety net mean it could be time to review all your financial plans.

Transform setbacks into opportunities with expert guidance. Kickstart a positive change today by scheduling a free consultation with a Continuum expert. 

Take charge of your financial future – call us now.

Britain falls into recession, shrinking 0.3pc in blow to Rishi Sunak – latest updates (

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, or a recommendation to a particular saving or investment strategy you should seek independent financial advice before embarking on any course of action.

The value and returns of an investment are not guaranteed, investors may lose some or all of their investment. Capital is at risk.

Your home may be repossessed if you do not keep up the repayments on your mortgage.

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