What to Do If the UK Enters Recession?

If you’ve looked at any news over the last 6 months, you’ve probably seen lots of talk about whether the UK is in or will enter an economic recession. A recession is a worrying time as it brings financial uncertainty for businesses and people. If the UK enters recession, job losses, rising prices, and economic slowdowns may become a reality.

While this can feel overwhelming, there are practical steps you can take to protect yourself and your finances to better tackle challenges. Firstly, understanding how a recession affects you - whether through job security, savings, or daily expenses - can help you make better decisions.

From budgeting smarter to looking for new income opportunities, being proactive can ease your financial strain. 

In this blog, we’ll give you some strategies to help stay financially secure if there is a recession, regardless of your employment status. With the right approach, you can weather economic downturns and come back stronger.

Let’s discuss what you can do to prepare and protect yourself if the UK economy enters a recession.

1. Review Your Spending

If the UK enters into an economic recession, every penny will count, so it’s important to review your spending habits. You may want to start by looking at your monthly expenses and identifying any areas where you can cut back.

Try to focus on the essentials like rent, utilities, and groceries, whilst actively reducing non-essential costs such as eating out or impulse purchases. Creating a budget can help you track your income and expenses, ensuring you live within your means.

You could also consider switching to cheaper alternatives for everyday items or looking to negotiate a better deal on your bills, wherever possible. Even the smallest adjustments can add up, helping you save more and stay financially stable during uncertain times.

2. Pay Off High-Interest Debt

High-interest debt, like credit cards and payday loans, can become a burden during a recession. The more you owe, the harder it will become to manage your finances.

That’s why you need to pay off your debts, starting with the highest interest rates first, to reduce the amount you pay over time. If you’re struggling, you could also look to consolidate your debt or negotiate lower interest rates with your lender.

Making at least the minimum payments on all debts will help you avoid penalties or damage to your credit score. If you are able to reduce what you owe, you can free up more money for essentials and emergencies, so you’re financially secure in tough times.

3. Build Up an Emergency Savings Account

Having an emergency savings account can be a financial lifesaver in a recession. It’ll give you a financial cushion in case the worst happens and you were to lose your job or have to pay off unexpected bills.

You should aim to save at least three to six months’ worth of essential expenses, such as rent, utilities, and groceries. If it’s too difficult to save a large amount, you can start small - setting aside even a little each month can add up over time.

You could also find ways to cut unnecessary expenses and direct that money into your savings. A tip to avoid excessive or accidental spending is to make sure to keep this fund separate from your everyday account, to remove temptation. This will ensure you have a safety net when you need it most.

4. Monitor Your Credit Score

Your credit score will play a big role in your financial stability, especially if the UK economy enters a recession. A good credit score can help you secure loans and get better interest rates, allowing you to be financially flexible. Regardless of recession, it’s good to keep on top of your credit score.

You should check your credit score regularly to spot any errors or unexpected changes. Additionally, make sure to pay your bills on time, keep credit card balances low, and avoid taking on unnecessary debt. If you notice any mistakes on your credit report, dispute them immediately.

A strong credit score can give you better financial options during tough times. Even though borrowing becomes much harder during a recession, you’ll find it easier to access credit when you need it, and it’ll help keep your financial future secure.

5. Recession-Proof Your Career

Job security can be uncertain during a recession, so it’s important to strengthen your career. You can start by improving your skills through online courses, certifications, or additional training. Keeping updated in your field can also make you more valuable to employers, especially when competition is higher.

It’s also worth keeping in touch with your professional network, as often as possible - that means connecting with your colleagues, attending industry events, and keeping your LinkedIn profile active. If job cuts happen, it’s good to have strong connections, as they can help you find new opportunities faster.

You can also diversify your income by freelancing or taking on side gigs. The more adaptable you are, the better prepared you’ll be to handle career changes during uncertain economic times.

For Affordable Loans in Case of an Emergency, Contact Salad Money

Will the UK go into a recession? Unfortunately, none of us know. However, if it does, you now have some tips on how to prepare for the challenges that may come with it. However, if you find yourself in urgent need of a loan during tough times, we’re here to help.

At Salad Money, we make affordable loan options available for every employed UK citizen. As one of the UK’s leading online lenders, we understand that the credit score system isn’t always fair. That’s why we use an open-banking-based assessment to evaluate the financial situation of every applicant.

We’re an FCA-regulated and authorised organisation, so you can trust us to keep your financial data safe. With our ‘More Than Your Score’ loans, we provide affordable loan options for working people, regardless of their credit score.