Global Recession
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@Kid-Chocolate said in Global Recession:
Bumbling leaders and their message-minions want the rest of us to believe in unicorns. Surprisingly, some people seem to be a little skeptical. This mornings’ headlines and takeaways:
UK expected to enter a recession this winter until mid-2024
- Inflation set to hit 40-year high of 13.3 per cent
- Inflation now expected to exceed 13% at its peak this year
- main cause of all this is energy bills which by Oct will be triple last year
- interest rates now 1.75%
CNBC poll today: U.S. small business confidence hits all-time low, 77% say inflation will continue to rise, 57% say the recession has already begun.
If only the UK had a long-term energy strategy that:
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Made effective use of the oil and gas at its disposal in the short term (5 to 15 years) - instead, UK is demolishing fossil fuel power stations meaning elec suppliers are having to pay higher wholesale costs to meet demand
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Invested in the most reliable (albeit capital expensive) fuel source - nuclear - in the medium to long term (10 - 50 years)
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Invested in R&D/incentivised private company R&D for alternative fuel technologies (not just renewables) in the long term to make UK energy secure so as not to be susceptible to supply side shocks like it is currently.
Current energy prices are not just as a result of Russia invading Ukraine. It is largely as a result of governments discouraging the development of new oil and gas fields for a number of years in order to meet (or be seen to meet) climate change targets. This has now exploded in their faces as supply can't just be ramped up overnight to meet demand which has grown, not dropped. Add to this decisions by countries (like UK and Germany) to decommission or fail to replace nuclear power stations and you have a recipe for over-reliance on renewable energy (not efficient currently to satisfy demand) and Russian gas and oil.
This has been exacerbated further by western sanctions that are seeking to remove Russia fossil fuels from the global energy markets. Geopolitics at play, as ever. US didn't want Europe reliant on Russian energy as it posed a risk to US influence. So European (and UK) consumers are feeling the pain of ever rising energy prices.
National leaders have backed themselves into a corner in their pursuit of climate change targets by not being honest with the electorate that doing so was always going to result in much higher energy costs.
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It’s always tempting to look for a reason or reasons why we get into such predicaments and then to apportion blame accordingly but in truth it is always a combination of things that provide the environment for things to happen. As @JC said on another thread, the powers that be are largely just passengers.
Certainly we can look back at some decisions and say that even without the benefit of hindsight they were fraught with risk; Europe placing much of its energy dependency on its ideological enemy is a case in point. But what a win it was getting all that cheap gas. Politics is a short term business, it’s only statesmanship that has a long term view.
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@broughie said in Global Recession:
@nzzp it doesn’t have to happen in one day but a conscious effort to move away from dependence on China would be a good long term goal.
Always an awesome idea, until you have to figure out who's losing money. China make everything. Until consumers are prepared to pay more for things made outside China it'll be hard to get traction.
China's approach really worries me. They seem the opposite of a liberal democracy.
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@Catogrande said in Global Recession:
It’s always tempting to look for a reason or reasons why we get into such predicaments and then to apportion blame accordingly but in truth it is always a combination of things that provide the environment for things to happen. As @JC said on another thread, the powers that be are largely just passengers.
Certainly we can look back at some decisions and say that even without the benefit of hindsight they were fraught with risk; Europe placing much of its energy dependency on its ideological enemy is a case in point. But what a win it was getting all that cheap gas. Politics is a short term business, it’s only statesmanship that has a long term view.
Agree with you. I wasn't apportioning blame to one particular administration. UK energy policy has been a mess since the 90s. Lots of ruling parties from both main parties chose to kick the can down the road rather than deal with the pain and leave behind a real legacy..
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@stodders said in Global Recession:
Invested in the most reliable (albeit capital expensive) fuel source - nuclear - in the medium to long term (10 - 50 years)
Complete screw-up by Blair who 20 years ago scrapped any new Nuclear power and ran down UK nuclear technology capability only to reverse the decision 5 years later. Both parties went for cheap gas and electricity imports rather than make the hard, long-term choices on nuclear though.
Credit to Johnson who actually started the ball rolling on Small Modular Reactors.
https://www.world-nuclear-news.org/Articles/Rolls-Royce-hopes-for-UK-SMR-online-by-2029
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@Catogrande said in Global Recession:
As @JC said on another thread, the powers that be are largely just passengers.
True, but there's often a big element of short-term and lazy thinking which exacerbates the problems
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@Victor-Meldrew said in Global Recession:
@Catogrande said in Global Recession:
As @JC said on another thread, the powers that be are largely just passengers.
True, but there's often a big element of short-term and lazy thinking which exacerbates the problems
For sure, I’m not saying that political decisions, actions and inactions don’t have an effect, but usually those things happened way in the past. It is the incumbents that are largely passengers in the here and now (and often getting blamed).
It would be good though if whoever the incumbents were, took note of the current issues and then planned more for the long term. But then you keep going back to Harold Wilson’s quote “A week is a long time in politics “.
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Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
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@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
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@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
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@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
It blows my mind how much the media jumps all over negative news. How many modelers were around when inflation was 10%?
Nobody has a clue. Nobody.
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I totally agree with Nelson.
https://www.spectator.co.uk/article/why-liz-truss-is-right-to-say-forecasts-are-not-destiny-
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@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
People have noticed stuff though. V. high energy prices may not last longer than 2-3 years (some are predicting up to 5 years) but taking an extra £2k p.a out of pay packets will likely have a huge impact in confidence, spending & the wider economy in the meantime.
Nobody has a clue. Nobody.
For the average Joanne, that's the whole point though, isn't it? They aren't gonna spend money if they think there's hard times ahead which is what the BoE and every other serious forecaster is saying.
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@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
People have noticed stuff though. V. high energy prices may not last longer than 2-3 years (some are predicting up to 5 years) but taking an extra £2k p.a out of pay packets will likely have a huge impact in confidence, spending & the wider economy in the meantime.
Nobody has a clue. Nobody.
For the average Joanne, that's the whole point though, isn't it? They aren't gonna spend money if they think there's hard times ahead which is what the BoE and every other serious forecaster is saying.
Yep exactly. Being talked into it.
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@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
People have noticed stuff though. V. high energy prices may not last longer than 2-3 years (some are predicting up to 5 years) but taking an extra £2k p.a out of pay packets will likely have a huge impact in confidence, spending & the wider economy in the meantime.
Nobody has a clue. Nobody.
For the average Joanne, that's the whole point though, isn't it? They aren't gonna spend money if they think there's hard times ahead which is what the BoE and every other serious forecaster is saying.
Yep exactly. Being talked into it.
Disagree. You can't talk yourself into wishing away economic reality like the need to find an extra £160+ pcm for energy, rising mortgage payments, inflation at 10% and rising, while wages are falling in real terms. That's not doom & gloom forecasting, it's reality.
If jobs hold up, energy prices drop next year, inflation starts to fall & interest rates don't go up to levels needed to control inflation in the past, we should be reasonably OK - but that's a lot of "if's" there. I take your point on being too negative and think Nelson's view that Treasury orthodoxy needs seriously questioning is a good one, but there's some really serious economic risks out there.
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@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
People have noticed stuff though. V. high energy prices may not last longer than 2-3 years (some are predicting up to 5 years) but taking an extra £2k p.a out of pay packets will likely have a huge impact in confidence, spending & the wider economy in the meantime.
Nobody has a clue. Nobody.
For the average Joanne, that's the whole point though, isn't it? They aren't gonna spend money if they think there's hard times ahead which is what the BoE and every other serious forecaster is saying.
Yep exactly. Being talked into it.
Disagree. You can't talk yourself into wishing away economic reality like the need to find an extra £160+ pcm for energy, rising mortgage payments, inflation at 10% and rising, while wages are falling in real terms. That's not doom & gloom forecasting, it's reality.
If jobs hold up, energy prices drop next year, inflation starts to fall & interest rates don't go up to levels needed to control inflation in the past, we should be reasonably OK - but that's a lot of "if's" there. I take your point on being too negative and think Nelson's view that Treasury orthodoxy needs seriously questioning is a good one, but there's some really serious economic risks out there.
I’m not saying these headwinds don’t exist. They do and they are real.
But we aren’t in one (yet) and if you keep saying one WILL happen then ppl will start tightening belts and what will happen will be worse.
This is an awful thing to say but perhaps it’s needed to kick start the people in this country again. The jobs are out there, everywhere. But the applicants aren’t as people got lazy after Covid and are leading simpler lives. Myself included. But I’ve agreed with my wife to go back to work do I can continue this - I’m fortunate to be in this position. We won’t starve or be cold regardless. But others will as they walk past the 20-30 jobs listed in the supermarket after working their 12 -20 hour week for 500/month after tax etc.
Perhaps if the message is “these changes are not long term and if we all pull together” it will be fine. But that’s NOT the message. It’s indirectly the opposite.
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@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
People have noticed stuff though. V. high energy prices may not last longer than 2-3 years (some are predicting up to 5 years) but taking an extra £2k p.a out of pay packets will likely have a huge impact in confidence, spending & the wider economy in the meantime.
Nobody has a clue. Nobody.
For the average Joanne, that's the whole point though, isn't it? They aren't gonna spend money if they think there's hard times ahead which is what the BoE and every other serious forecaster is saying.
Yep exactly. Being talked into it.
Disagree. You can't talk yourself into wishing away economic reality like the need to find an extra £160+ pcm for energy, rising mortgage payments, inflation at 10% and rising, while wages are falling in real terms. That's not doom & gloom forecasting, it's reality.
If jobs hold up, energy prices drop next year, inflation starts to fall & interest rates don't go up to levels needed to control inflation in the past, we should be reasonably OK - but that's a lot of "if's" there. I take your point on being too negative and think Nelson's view that Treasury orthodoxy needs seriously questioning is a good one, but there's some really serious economic risks out there.
I’m not saying these headwinds don’t exist. They do and they are real.
But we aren’t in one (yet) and if you keep saying one WILL happen then ppl will start tightening belts and what will happen will be worse.
Well yes, but the belt-tightening is taking place now as the need for it is real and immediate
This is an awful thing to say but perhaps it’s needed to kick start the people in this country again. The jobs are out there, everywhere. But the applicants aren’t as people got lazy after Covid and are leading simpler lives.
Myself included. But I’ve agreed with my wife to go back to work do I can continue this - I’m fortunate to be in this position. We won’t starve or be cold regardless. But others will as they walk past the 20-30 jobs listed in the supermarket after working their 12 -20 hour week for 500/month after tax etc.Agree 110%. Perhaps if people start noticing fewer job ads, they might think they actually take one in case they disappear altogether. Taking it up a notch, it's hard to see a GP here and yet 4 of the 5 GPs in the local practice are part-time on 2-3 days a week - the impact in terms of work days lost is really high in a rural area
Perhaps if the message is “these changes are not long term and if we all pull together” it will be fine. But that’s NOT the message. It’s indirectly the opposite.
There's a complete lack of realism and total tribalism which makes that difficult, sadly. Too many believers in magic solutions.
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@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
People have noticed stuff though. V. high energy prices may not last longer than 2-3 years (some are predicting up to 5 years) but taking an extra £2k p.a out of pay packets will likely have a huge impact in confidence, spending & the wider economy in the meantime.
Nobody has a clue. Nobody.
For the average Joanne, that's the whole point though, isn't it? They aren't gonna spend money if they think there's hard times ahead which is what the BoE and every other serious forecaster is saying.
Yep exactly. Being talked into it.
Disagree. You can't talk yourself into wishing away economic reality like the need to find an extra £160+ pcm for energy, rising mortgage payments, inflation at 10% and rising, while wages are falling in real terms. That's not doom & gloom forecasting, it's reality.
If jobs hold up, energy prices drop next year, inflation starts to fall & interest rates don't go up to levels needed to control inflation in the past, we should be reasonably OK - but that's a lot of "if's" there. I take your point on being too negative and think Nelson's view that Treasury orthodoxy needs seriously questioning is a good one, but there's some really serious economic risks out there.
I’m not saying these headwinds don’t exist. They do and they are real.
But we aren’t in one (yet) and if you keep saying one WILL happen then ppl will start tightening belts and what will happen will be worse.
Well yes, but the belt-tightening is taking place now as the need for it is real and immediate
This is an awful thing to say but perhaps it’s needed to kick start the people in this country again. The jobs are out there, everywhere. But the applicants aren’t as people got lazy after Covid and are leading simpler lives.
Myself included. But I’ve agreed with my wife to go back to work do I can continue this - I’m fortunate to be in this position. We won’t starve or be cold regardless. But others will as they walk past the 20-30 jobs listed in the supermarket after working their 12 -20 hour week for 500/month after tax etc.Agree 110%. Perhaps if people start noticing fewer job ads, they might think they actually take one in case they disappear altogether. Taking it up a notch, it's hard to see a GP here and yet 4 of the 5 GPs in the local practice are part-time on 2-3 days a week - the impact in terms of work days lost is really high in a rural area
Perhaps if the message is “these changes are not long term and if we all pull together” it will be fine. But that’s NOT the message. It’s indirectly the opposite.
There's a complete lack of realism and total tribalism which makes that difficult, sadly. Too many believers in magic solutions.
That's what happens when you peddle fairytales for too long. People begin to think they are real, not myths.
Both the media and politicians are complicit in this. Stupid policies that have little to no real world benefits to keep ppl sweet in the hope they'll get their vote in the next election cycle. Stupid news stories glorifying how to make easy money through influencing, trading, porn etc. Ppl stop aspiring to work hard and look for the quick, easy option. Which turns out not to be attainable after all.
Add onto this that ppl in the UK are now so quick to say that the govt should solve all their issues rather then taking responsibility to do it for themselves, and you get the society that we now have.
UK has lots of opportunities. It requires hard work and application, but so do most of the best things in life.
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@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
@MajorRage said in Global Recession:
@Victor-Meldrew said in Global Recession:
Anecdotal stuff:
The car dealers who didn't want to know me when I as looking at a new car last year are now emailing me with offers - inc 0% finance.
Builders who were booked solid for the next 18 mths are now saying they can do my work in the next few months.
Holiday lets in Cornwall for late & next season are dropping off quite fast.
Feels like this country is kind of talking itself into it honestly.
There's a bit of that, I guess, but there's def. a change in sentiment which the expected rise in energy costs will likely solidify. As long as employment holds up, I think we should be OK though.
The energy costs suck but won’t last forever.
Your observations are all based on ppl tightening belts for reasons they likely haven’t even noticed in reality.
People have noticed stuff though. V. high energy prices may not last longer than 2-3 years (some are predicting up to 5 years) but taking an extra £2k p.a out of pay packets will likely have a huge impact in confidence, spending & the wider economy in the meantime.
Nobody has a clue. Nobody.
For the average Joanne, that's the whole point though, isn't it? They aren't gonna spend money if they think there's hard times ahead which is what the BoE and every other serious forecaster is saying.
Yep exactly. Being talked into it.
Disagree. You can't talk yourself into wishing away economic reality like the need to find an extra £160+ pcm for energy, rising mortgage payments, inflation at 10% and rising, while wages are falling in real terms. That's not doom & gloom forecasting, it's reality.
If jobs hold up, energy prices drop next year, inflation starts to fall & interest rates don't go up to levels needed to control inflation in the past, we should be reasonably OK - but that's a lot of "if's" there. I take your point on being too negative and think Nelson's view that Treasury orthodoxy needs seriously questioning is a good one, but there's some really serious economic risks out there.
I’m not saying these headwinds don’t exist. They do and they are real.
But we aren’t in one (yet) and if you keep saying one WILL happen then ppl will start tightening belts and what will happen will be worse.
That is an interesting conundrum: if belt tightening happens you risk recession, but if it doesn’t you risk inflation. Most of the economists I know would advocate for avoiding inflation even at the cost of a recession. And I suspect for your average punter inflation is worse because it has immediate personal impact that is felt for a long time. Recessions hurt differently and usually for a shorter duration.