A Guide to the UK “Recession” in 2024
The word “recession” sends chills through wallets everywhere. But what is a recession and how does it impact individuals? This week, we’ve compiled a short recession guide to help you work out what’s going on with the UK economy and ride the wave. After that, we’ll preview the upcoming events that you can trade this week.
Recession declared
You can’t have escaped the news last week that the British economy is technically in recession after 2023 offering the poorest GDP performance in years. Last year, the economy took a bit of a nosedive, with GDP shrinking for two consecutive quarters.
According to the Office for National Statistics, Gross domestic product fell 0.3% in the final three months of 2023, following a 0.1% contraction in the July-to-September period.
Source: CNN
What does this mean?
Think higher grocery bills, tighter budgets, and perhaps even job uncertainty in some sectors. That will peg back consumer spending and likely hurt the high street, online retailers and travel, so expect those industries to suffer.
Some industries are, however, relatively recession-proof. So, if you’re looking to diversify your portfolio, you might want to check out the following:
● Pharmaceuticals
● Healthcare
● Home maintenance stores
● Grocery chains
● Bargain/discount stores
● Property management companies
The sectors that may do well during recessions are those that:
- Provide goods and services that increase in demand directly because of the conditions that the recession has created;
- Offer cheaper alternatives to desirable products/services;
- Have such a demand that they’re always needed, regardless of income change — e.g. essential groceries/pharmaceuticals.
How long will the UK recession last?
Crystal balls are (sadly) out of stock, but let’s get one thing in perspective: most experts predict this recession to be mild and short-lived.
The UK economy has fared much better than many economists feared a year ago. Many experts are even rejecting the “recession” label, as they feel the downturn’s length will be so brief.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics stated, “It’s overly dramatic to label the decline in economic activity in the second half of 2023 a recession, given that employment continued to rise, real wages rebounded and measures of business and consumer confidence returned to levels consistent with rising activity by the end of the year.”
Top tips for investors
Hold your horses! Panic selling rarely ends well. Particularly if Mr. Tombs is right in his belief that this downturn won’t hang around too long.
Recession or not, it’s generally a good strategy to diversify your investments (don’t put all your eggs in one basket) and prioritise needs over wants. Avoid making big financial decisions or home purchases during a recession. Remember, even recessions have an end, and being financially stable when the sun shines again is key.
Let us know your thoughts
What do you think? Is the UK really in recession? How long will it last? Share your trading strategy with us over on X: @_contentworks.
Top fundamental events week commencing 26/02/24
It looks like it’s going to be a pretty quiet week — let’s check it out.
Monday
No major events are scheduled.
Tuesday
● JPY — Inflation Rate YoY
● EUR — German GfK Consumer Confidence
● USD — CB Consumer Confidence; Durable Goods Orders
Wednesday
● USD — GDP Growth Rate QoQ 2nd Est
Thursday
● EUR — German Inflation Rate YoY Prel; French Inflation Rate YoY Prel
● CAD — GDP Growth Rate Annualised; GDP Growth Rate QoQ
● USD — Core PCE Price Index MoM; Core PCE Price Index MoM; Personal Income; Personal Spending MoM
Friday
● CNY — Chinese NBS Manufacturing PMI; Chinese Caixin Manufacturing PMI
● JPY — Consumer Confidence
● EUR — Inflation Rate YoY Flash
● USD — UoM Consumer Sentiment Index; ISM Manufacturing PMI
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Speak soon!
The Contentworks team
