UK recession warning as Britons told to take ‘precautionary measures’ with money | Personal Finance | Finance
Recession occurs when the economy experiences a sharp decline in economic activity, and there are fears this could be fuelled by rising inflation and the cost of living crisis. As Britons tighten their belts, cutting back further seems impossible for many.
Brean Horne, personal finance expert at NerdWallet, suggested difficulties could occur for people in the future.
She said: “Despite recent ONS figures that the UK economy grew by 0.5 percent in May, the economic picture for many UK households remains bleak as the cost of living crisis continues to escalate.
“The rate of inflation is at a 40-year high and there is speculation of a potential recession.
“Many households are facing unprecedented financial uncertainty and insecurity.”
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The expert pointed towards steps individuals can take to protect themselves from a potential recession, and sure up their finances.
Firstly, altering one’s spending habits can be key in getting income and expenditure under control.
Small expenses such as subscriptions or spending money on clothes and eating out can add up, so adjusting these is likely to help.
Ms Horne also encouraged individuals to prioritise debt repayments, adding: “Try and prioritise repaying high-cost debts such as credit cards or overdrafts to be in a debt-free position, which will be really beneficial during a period of economic and financial uncertainty.
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“If you have a personal loan, ensure this is paid on time, every month.
“A late payment on a loan, or missing it completely, can negatively impact your credit score and mean you could find it harder to secure financial products in the future.”
Individuals are also encouraged to build up an emergency savings pot for a rainy day.
With uncertainty rife, having reserve cash is likely to be a sensible decision in case a safety net is required.
Typically, experts encourage individuals to put aside some three to six months worth of expenditure for their needs.
Finally, Ms Horne urged Britons to improve their credit as much as possible.
This can be done by paying off debts on time, registering to vote, putting utility bills in one’s name, and avoiding the use of payday loan companies.
In doing so, the expert states Britons are likely to have better chances at securing affordable credit in the future.
