The Bank of England has just announced a very bleak outlook on the future of the UK Economy:
The central bank said Thursday that the British economy could shrink by 14% this year. That would be the biggest annual contraction since a decline of 15% in 1706, based on the bank’s own best estimate of historical data.
This comes as no surprise to many of us who have been predicting an economic collapse for many years, however what we didn’t anticipate was the events that would precede it and amplify its severity. We knew it was going to be bad, but this Coronavirus theatre has pushed the severity of the collapse to new realms of doom.
The article from CNN continues:
In a report that examined the impact of the pandemic, the Bank of England said that GDP contracted by 3% in the first quarter of this year and would fall by as much as 25% in the second quarter, leaving the economy about 30% smaller than it was at the end of 2019. Unemployment is expected to increase to 9%.
So, what does this mean for the average person living in the UK? Small businesses are initially the first to go, and we are talking about the larger majority of small businesses, not just a small number. The knock on effect of this is increased unemployment, lower tax revenue, greater government expenditure and thus an inevitable tax increase.
Larger businesses will begin reorganizing their expenses to prepare for the worst, this typically starts with employees, which results in more of the above side effects.
Standard of living will decrease as household income reduces, cost of living will increase as the value of the pound deflates and businesses loose competition and thus offer less competitive prices.
Many of the Banks, if not all are technically bankrupt already, so you can be sure over the coming months and years we will see colossal problems there with possible ‘bail ins’. If you are not familiar with the term ‘Bail in’, it is similar to ‘Bail out’ accept rather than the Government bailing them out, account holders bail them out, without consent. Yes, thats actually legal, google it!
At this point civil unrest, a public health crisis and increased Government regulation is only a matter of time.
A downturn is inevitable, whether it will be as bad as the fear-mongering press remains to be seen, but regardless it would be careless to not take note of these warnings and start preparing yourself for what’s to come.
If you have savings, it would be very sensible at this point to move it out of your bank at the very least. However, with the value of the pound at risk of massive decline it would also be worth considering moving any savings you do have into a safe haven, i.e. Gold, Silver, Bitcoin.
Stock up on dried foods sooner rather than later, start reorganizing your finances now. Make sure you’ve got the cheapest contracts and insurances possible. Ditch the unnecessary conveniences such as Spotify, Netflix and Amazon Prime (There is a thing called BitTorrent).
Anyway, we’ll be following the economy closely over the coming months and keep you updated of anything we think you should know, but for now – don’t panic, in every major recession comes major opportunity.
Please leave your comments below and let us know what you think