What the Bank of England says about recession – and 5 things you need to do about it

It is the brave man or woman who makes financial predictions these days.

The Governor of the Bank of England has no choice. Not only does he have to make predictions, the decisions he makes based on them will affect all our futures.

BoE governor Andrew Bailey has a very clear message. The British economy has already slipped into the first months of a recession.

Economists define a recession as two consecutive quarters of contraction. A combination of Russia’s invasion of Ukraine, the Truss/Kwarteng mini-budget spooking financial markets and ongoing supply chain pressures have sent inflation to a 40-year high of 11.1%. In response, consumers and businesses have slashed spending, making the economy contract.

Recession means less money in all our pockets. It is always painful and for some it will mean financial hardship, with lost jobs for some and financial struggles for many.

There is a small ray of hope. Mr. Bailey has hinted that markets may be getting their bets wrong on future monetary policy. “We think bank rate will have to go up by less than currently priced into financial markets.” He might be signalling that we have seen the last big interest rate rise for a while.

But – whether it is short and mild or long and hard, recession is coming. You may need to look at your financial arrangements to weather it.

1. Look at your savings

Having a reserve of cash can help you get through recession problems. If you can, start boosting your emergency fund.

Recession or not, your money should be safe. If your bank, building society or credit union is covered by the FSCS, which most well-known ones are, you are covered for up to £85,000 if the company goes bust. 

At Continuum we monitor the savings market and can help you make your savings work harder.

2. Look at your investments

Your investments may take a hit during a recession. The value of stocks may fall dramatically – but you would probably be unwise to sell up. Holding on to your investments will mean that you can hope to recover their value as the economy gets back on its feet. 

With the appropriate investment strategies, you may even be able to secure some stock bargains.

To discuss investment strategies for a recession, talk to a Continuum expert.

3. Look at your spending

Incomes are likely to be tighter, while costs may continue to increase for the next few months. Keeping your spending under control may be essential. Cutting down the luxuries may be obvious, but you might need to look at things like your mortgage to ensure that you are getting the best deal, and not spending more than you have to.

At Continuum we can help you find the most suitable mortgage deal for your needs.

4. Look at your protection

Getting value for money for the protection you need will be important too. Life cover is vital if you have dependents, but you might want to consider cover that would provide an income if you became unable to work because of illness. Some policies can even include protection against a loss of income caused by redundancy.

Getting a comprehensive financial safety net to ensure your and your family’s financial security is vital at any time. In a recession the need is just as great, but it may be more important than ever to ensure that the costs are as low as possible.

A call to Continuum can help you ensure you have the insurance cover you need at the best possible price

5. Look at some expert help

The message from the Bank of England is clear. There are likely to be some challenging times ahead, and recession may derail many people’s financial plans. At Continuum we can help you deal with all those challenges and get your finances back on track.  

Simply call us today.

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

The value of investments can fall as well as rise and you may get back less than you invested.

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




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