{"id":1735830,"date":"2022-11-12T06:13:08","date_gmt":"2022-11-12T11:13:08","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1735830"},"modified":"2022-11-12T06:48:02","modified_gmt":"2022-11-12T11:48:02","slug":"bank-of-england-warns-u-k-faces-longest-recession-in-a-century","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bank-of-england-warns-u-k-faces-longest-recession-in-a-century\/","title":{"rendered":"Bank of England Warns U.K. Faces Longest Recession in a Century"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbank-of-england-warns-u-k-faces-longest-recession-in-a-century%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1735830&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><figure class=\"caas-figure\">\n<div class=\"caas-figure-with-pb\">\n<div>\n<div class=\"caas-img-container\"><img decoding=\"async\" class=\"caas-img has-preview\" alt=\"The Bank of England just warned that the UK faces its longest recession in 100 years \u2014 is the US next? Here are 3 reasons why a 2023 downturn would be like no other\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/961a6c7f0358759cf46f88dc4c09f462\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/961a6c7f0358759cf46f88dc4c09f462\" \/><\/div>\n<\/div>\n<\/div>\n<p><figcaption class=\"caption-collapse\">The Bank of England just warned that the UK faces its longest recession in 100 years \u2014 is the US next? Here are 3 reasons why a 2023 downturn would be like no other<\/figcaption><\/p>\n<\/figure>\n<p>The U.K. can\u2019t seem to catch a break. First, it lost its longest-reigning monarch this fall, and only a couple weeks later saw its <a href=\"https:\/\/moneywise.com\/investing\/stocks\/liz-truss-has-resigned-but-you-can-still-benefit?utm_source=syn_oath_mon&#038;utm_medium=Z&#038;utm_campaign=23692&#038;utm_content=oath_mon_23692_shortest-serving+prime+minister+resign\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:shortest-serving prime minister resign\" class=\"link\">shortest-serving prime minister resign<\/a>.<\/p>\n<p>Now, its central bank, the Bank of England, is warning the country is on the precipice of the longest recession in a century, as it pushed through the largest interest rate hike since 1989.<\/p>\n<p>In announcing the 0.75% rate change to bring the current bank rate to 3%, the committee that sets monetary policy in the U.K. acknowledged they\u2019re facing a \u201cvery challenging outlook.\u201d<\/p>\n<p>And in a news conference after the announcement, Andrew Bailey, the bank\u2019s governor, said he realizes the tougher interest rate policy will be a pinch for Brits. But with inflation in the U.K. now at 10.1%, Bailey added: \u201cIf we do not act forcefully now it will be worse later on.\u201d<\/p>\n<h2>Don&#8217;t miss<\/h2>\n<p>But with the close relationship between the U.S. and the U.K. \u2014 every U.S. state has jobs connected to an investment by a U.K. company and nearly 1.3 million Americans work for British companies in the U.S., according to the U.S. Department of State \u2014 where does that leave us?<\/p>\n<p>Although no one likes to see their allies struggle, there are a few good reasons to believe the situation won\u2019t be nearly as dire on this side of the pond.<\/p>\n<h2>The labor market is robust<\/h2>\n<p>In most recessions, economic output and employment decline simultaneously. Lower revenue compels businesses to cut back on staff, which leads to higher unemployment. Ultimately, higher unemployment leads to lower consumer spending and that creates a vicious cycle.<\/p>\n<p>In 2022, however, unemployment is still at a record low. The official unemployment rate in October was 3.7% \u2014 a slight increase from the month before, but fairly close to the numbers seen pre-pandemic in February 2020. A robust job market is \u201chistorically unusual\u201d during a recession, according to economists at Goldman Sachs.<\/p>\n<p>This unusually strong job market could be deriving strength from another unusual source: corporate financial strength.<\/p>\n<h2>Companies are cash-rich<\/h2>\n<p>Corporations see a decline in sales and earnings during recessions. That process may have already started. However, U.S. corporations are sustaining profits and sitting on an immense cash hoard going into this recession.<\/p>\n<p><strong>Read more:<\/strong> <a href=\"https:\/\/moneywise.com\/investing\/investing-basics\/3-ways-to-get-rich-outside-of-the-stock-market?placement=HALF&#038;utm_source=syn_oath_mon&#038;utm_medium=Z&#038;utm_campaign=23692&#038;utm_content=oath_mon_23692_Grow+your+hard-earned+cash+without+the+shaky+stock\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Grow your hard-earned cash without the shaky stock market with these 3 easy alternatives\" class=\"link\">Grow your hard-earned cash without the shaky stock market with these 3 easy alternatives<\/a><\/p>\n<p>The average U.S. corporation\u2019s after-tax profit margin is around 16% right now \u2014 the highest it\u2019s been since 1950. In traditional recessions, this rate drops down to single digits. Meanwhile, these corporations are collectively sitting on over $3 trillion in cash. That\u2019s a record level and also highly unusual for a recessionary environment.<\/p>\n<p>Companies may have raised these funds during the era of easy money and low-interest rates over the past decade. Now, this cash is acting as a buffer and could allow companies to retain staff despite the economic slowdown.<\/p>\n<h2>The Fed\u2019s hawkish stance<\/h2>\n<p>Another unusual factor of this recession is the Federal Reserve\u2019s hawkish stance. In most recessions, the central bank cuts interest rates and adds more money to the economy to stabilize it.<\/p>\n<p>In 2022, however, the Fed has been <a href=\"https:\/\/moneywise.com\/news\/economy\/fed-just-hiked-interest-rates-for-4th-straight-time?utm_source=syn_oath_mon&#038;utm_medium=Z&#038;utm_campaign=23692&#038;utm_content=oath_mon_23692_aggressively+raising+rates\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:aggressively raising rates\" class=\"link\">aggressively raising rates<\/a> to curb inflation. Considering the strength of the job market and corporate balance sheets, the central bank may have more reason to keep raising rates.<\/p>\n<h2>What comes next?<\/h2>\n<p>\u201cThis is unsustainable,\u201d says WSJ\u2019s Jon Hilsenrath. He believes that one of two things must happen to resolve this misalignment: either the economy recovers swiftly, ending the recession, or the economy keeps dipping, compelling employers to cut jobs.<\/p>\n<p>These two scenarios could potentially be the \u201csoft landing\u201d and \u201chard landing\u201d the Fed has previously mentioned. Investors need to keep an eye on all indicators to see which scenario is playing out because the impact could be severe.<\/p>\n<p>This could be an ideal time to bet on beaten-down growth and <a href=\"https:\/\/moneywise.com\/investing\/stocks\/evercore-likes-these-3-hyper-growth-tech-plays-to-provide-an-additional-boost?utm_source=syn_oath_mon&#038;utm_medium=Z&#038;utm_campaign=23692&#038;utm_content=oath_mon_23692_tech+stocks\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:tech stocks\" class=\"link\">tech stocks<\/a> if a soft landing occurs. However, in a hard landing, investors may need to take refuge in <a href=\"https:\/\/moneywise.com\/investing\/stocks\/get-out-of-these-distorted-markets-mohamed-el-erian?utm_source=syn_oath_mon&#038;utm_medium=Z&#038;utm_campaign=23692&#038;utm_content=oath_mon_23692_asset-backed+defensive+stocks\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:asset-backed defensive stocks\" class=\"link\">asset-backed defensive stocks<\/a> like health care companies and <a href=\"https:\/\/moneywise.com\/investing\/alternative-investments\/hedge-your-portfolio-with-commercial-real-estate?utm_source=syn_oath_mon&#038;utm_medium=Z&#038;utm_campaign=23692&#038;utm_content=oath_mon_23692_real+estate+investment+trusts\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:real estate investment trusts\" class=\"link\">real estate investment trusts<\/a>.<\/p>\n<p>In either case, 2022 and 2023 will no doubt be remembered as interesting years for investors.<\/p>\n<h2>What to read next<\/h2>\n<p><em>This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank of England just warned that the UK faces its longest recession in 100 years \u2014 is the US next? Here are 3 reasons why a 2023 downturn would<\/p>\n","protected":false},"author":1,"featured_media":1735833,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1735830","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1735830","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1735830"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1735830\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1735833"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1735830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1735830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1735830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}