Over the last few weeks I've become an avid fan of reading everything I can from all sides of the debate to try and get a clearer overview of what could happen over the next few years. Obviously in the first few days the seesaw swung madly up and down, and it looked a bit like that game where you try to unseat the person at the other end by slamming yourself down hard your end. In this case, Doom and Gloom were at one end and Opportunity and Prosperity at the end. After few days of slamming down hard, it all started to quieten down a bit and the seesaw went from violently rocking to gently tilting up and down on a daily basis.
I don't want to be the harbinger of bad tidings, but now all the fuss about the Tory party leadership has been resolved, I can see that the seesaw has almost come to rest tilted towards Doom and Gloom. There are too many little things starting to stack up and are pointing towards recession and it will begin with the interest rates coming down and soon. Dropping interest rates are about a close an admittance of problems from the Powers that Be at the Bank of England that you can get. The hope by dropping them is that the banks will keep lending, businesses will keep on doing business, everyone will pay less money on their loans, and people looking for new homes will be buoyed up by the falling rates to try and get a good deal (which makes the large assumption that banks will pass on the rate fall).
However, if you remember we dropped to 0.5% in March 2009 to try and instill confidence in the markets in the face of recession. It didn't work, we had one anyway. The second that interest rates dropped, the banks and building societies squealed in fear and stopped lending money. The Bank of England started printing money to try and get things moving, but businesses got nervous, started making people redundant, stopped recruiting, stopped investing, stopped marketing, stopped training, just stopped in general due to fear of the unknown.
The worrying thing is, everyone thinks it will be different this time, but fear is the biggest motivator of paralysis there is. Right now, rather than seeing the opportunities and acting bravely to seek them, I'm willing to bet the majority of businesses - including your employer if you have a job - are looking at how to reduce their risks. They're looking at how to retrench, save money and stay put for a couple of years to 'see how Brexit pans out'.
It's human nature. Why do you think the main defensive mechanism of animals when threatened is to stay still in the hope they won't be seen? We used to do it when picking our way across open ground hoping a sabre tooth tiger wouldn't spot us, and we still do it today.
Can I make a suggestion? Start preparing for a recession just in case. Make changes to you spending behaviour now out of choice, rather than out of necessity. Stash away a little bit of money and get that emergency fund looking good. Get out of debt if possible. Revisit your essential bills and switch suppliers to try and get the best deals possible. Cancel the unused gym membership. In fact, look at all memberships you barely make use of and cancel them. Make some extra money. Sell some stuff on eBay. Create some wiggle room in your budget.
Martin and I are about to start again with our suppliers, so we can hunt down some really good deals, but we've decided that, for now, money earmarked for savings and mortgage overpayments will be stashed temporarily as cash. If all goes well, optimism rules the day and a recession is avoided, in a year's time we'll distribute the money as we planned.
We realise that by our actions of battening down the hatches we could be part of precipitating a recession, that by not carrying on as normal we might cause it to happen, but frankly, I believe in the power of human nature. And don't forget, the USA is facing its own issues with a looming election and the possibility of Donald Trump being the President. The ripples from that will reach us.
I smell a storm coming.