Brits fear we’re already in a recession

Credit crunch chat and talk of a looming recession has got the nation into a state of panic; one in six Brits (17%) believe we’re already in a recession, while one fifth (20%) find the slightest suggestion ‘fills them with fear’.

The report, by leading independent personal finance website Fool.co.uk, highlights how people are generally uncertain about the financial status of the nation and when it will become stable again; one in 20 (5%) fear it will continue indefinitely, with a third (31%) predicting it’ll last at least 2 years.

Cracking the Credit Crunch: Recession Veterans vs Recession Virgins quizzed over 1,000 UK adults. It studied the differences in opinion and behaviours of two groups; those who have not worked through a recession and are accustomed to credit on tap, and those who have weathered the tougher times through the 70s, 80s and 90s.

Major findings include:

All too familiar: 41% of Recession Veterans say they’ve already seen a negative impact on their finances, compared with just 25% of Recession Virgins

In the dark: One third of Recession Virgins are clueless about the looming downturn

Negative impact: Almost one in ten Recession Veterans have experienced negative equity in the past, a further 6% have lost a job as a result of recession and 3% have lost their homes

Safe as houses: Three quarters (74%) of homeowners have decided to sit tight with no plans to move, as the property market remains uncertain. 13% are so concerned about negative equity, they have had their homes valued

Saving for a rainy day: While 78% of the nation agree that saving is a good discipline, a third (33%) simply can’t afford to do it. For those that can afford to save, they only manage to squirrel away 6% of earnings per month

Most telling of modern financial habits is that one third of Recession Virgins feel stuck in a money trap, with no choice other than to be in debt. Generally across the nation people agree that the UK’s debt culture is a huge concern: three quarters (74%) of Brits believe that borrowing cheap money has been detrimental to society.

That being said, for both those who have experienced previous recessions and those who haven’t, it’s acknowledged that spending patterns need to change based on the crisis. Three quarters (74%) will change their financial habits this year to safeguard against the effects of an economic slowdown.

David Kuo, Head of Personal Finance at Fool.co.uk, comments on the study: “The term Credit Crunch has become a part of our everyday vocabulary over the past 8 months, but it’s instructive to see how people feel about a looming recession.”

“In an economic downturn there will be opportunities and threats, and we can take steps to maximise the first and minimise the second. And simple measures such as reining in spending will ensure that we have a pot of spare money tucked away to see us through a slump.”

“With money at your disposal, you can choose whether to pay down your mortgage or put it into a high-interest savings account - the choice is yours. It won’t make the Credit Crunch go away, but it will make life more bearable until it does.”