The UK may have entered what experts say could be the longest recession in a century as official statisticians said the economy shrank by 0.2% between July and September.
The Chancellor Jeremy Hunt warned that he will be making “eye-watering” decisions after the Office for National Statistics (ONS) said gross domestic product (GDP) fell in September. These are the biggest quarterly and monthly falls since the UK has come out of lockdown, and if the economy also shrinks in the final three months of this year – as experts predict – it would push the economy into a recession that could last for two years.
The Chancellor will reveal his autumn budget on Thursday, November 17, in which he will be working to make a possible recession “shallower and quicker”. But this will include painful public spending cuts and tax hikes, as he insisted there is a so-called black hole in the nation’s finances.
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But what impact could a recession have on young people? The last two recessions, in 2008 and in the first year of the pandemic, impacted young people the most.
Young people are generally more vulnerable to unemployment, and in 2009 40% of unemployed people in were aged between 15 and 24. This was primarily due to cutbacks on graduate recruitment schemes.
The hospitality industry, which contributed to 3% of the UK’s economic output, provided 2.53 million jobs in the UK in 2019 – primarily for younger workers, foreign-born workers, part-time workers and workers from minority ethnic backgrounds.
The increase in inflation would also cause student loan interest rates to increase, so graduates will have to pay even more money to Student Finance. Young people are also more likely to rent their homes than own them, so increased inflation means increased rent.
The best ways to protect yourself in a recession usually include paying off as much debt as possible, however, according to Jonquil Lowe, Senior Lecturer in Economics and Personal Finance at the open University: “Don’t overpay your student loan if you have one – unlike other debts, these repayments automatically stop if your income falls below the repayment threshold (currently £27,295 for many graduates).”
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