How to survive the recession
January 28, 2009
Time to get real
The IMF released its World Economic Outlook update today, forecasting World Output to grow by 0.5% in 2009. Before you start thinking “Oh, that’s not so bad”, take a closer look:
First, it compares very badly against 3.4% growth in 2008, and 5.2% in 2007.
Second, and scarier still, the UK economy is expected to shrink by 2.8% in the same period (although Downing St dispute the projections).
This leaves a £20bn hole in the Chancellor’s coffers. And what do you do when you’re £20bn short? The options boil down to:
- Cut spending
- Increase taxes
- Print more money
So it’s going to be a long hard slog. But you know that already, or you wouldn’t be reading a well-informed blog like this one 
. So what should you do? Here’s my suggestion:
- Stop blaming the banks. OK so they took unnecessary risks and lent recklessly, but it takes two to tango. Borrowers unable to repay are at least as culpable as lenders who conveniently forgot to manage risk because they were making money hand-over-fist.
- Manage your money better than you think you need to. Pay down your debts. Save. Budget and maintain a sustainable lifestyle.
- Get your head down – work harder than you’ve ever worked before. When times are hard and companies downsize, the most valuable staff are the most productive. When companies go bad, the best people find new employment faster.
We’re not talking rocket science here, and we’re not even talking about financial advice, this is just common sense. Once you’ve got that straight, meet your Independent Financial Adviser (IFA) and make sure that your financial arrangements are inline with your goals. Simple, affordable steps like taking out an income protection policy could help you through the tough times.
Read the IMF release (PDF).
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