During this down-turn there will be many people that are made redundant, but this does not have to be the end and could lead you to better things – much better things, as this video demonstrates…

Starting a business in a downturn from the BBC

In the last recession back in the 1990′s, thousands lost their jobs back then too. I hope that this video will give you inspiration.

If you are looking for a business that is recession-proof try typing the term “recession-proof business” in the upper left box and then choose from the hits there. This search will turn up sites giving you their wisdom on top tips to survive a recession along with other blogs and websites telling you which businesses are most likely to survive during a recession.

I will leave it to you to decide on which of these writers know their stuff. However, if you hit on something that looks like the type of business you would like to buy or even set up yourself, then do a bit more research on that type of business.

Good luck – these are challenging times and I guess there are no guarantees, but if you run your business well, continue to advertise and provide great customer service then your business should service and continue to flourish when times come right again.

Opec have been cutting production to help maintain the barrel price and has again agreed to cut this again by a record 2.2 million barrels per day. However, despite these cuts and to-date this is 4.2 million barrels per pay, the price of oil has continued its fall, as inventories of oil build up in America and other major oil consumers around the globe.

Merrill Lynch predicted that, should China go into recession, the price could fall to around $25 per barrel, which I must admit seems so low, but then I though that price had bottomed out at around $55 per barrel and then at just over $40. So it is any ones guess where the bottom might be to this fall in oil prices at a time where consumer confidence in world economies is at an all time low.

Yesterday’s official GDP figures show that the UK economy has stalled, but the past week has also seen a stream of grim news from overseas. Sales, profits, share prices and the number of people with jobs are declining every day, and all the indications are that this is just the beginning of a downturn which is likely to hit white-collar workers just as hard as those on the factory floor.

From the richest to the poorest, the credit crunch is now claiming victims. One in 10 jobs is going at Goldman Sachs, and the squeeze on top bankers will hit the market for big-ticket luxury. Sales of Agas are down 15% and De Beers, the world’s largest diamond producer, said this week that it would cut the number of stones it sends on to the market as demand – and prices – fall. Air France yesterday issued a profits warning, and multiple airline collapses are forecast.

Workers in Argos’s catalogue shops, however, are likely to face far more hardship than any of the Goldman men and women. The chain this week revealed a 9% fall in sales over the most recent weeks – the worst in its 35-year history – and said that store staff have had their hours cut by 20% in an attempt to cut costs.

Other retailers on the rack include Debenhams, Currys, PC World, Sports Direct and middle England’s favourite store chain, John Lewis. All have reported big falls in sales in the past few days and most are slashing investment in an attempt to save cash.

Yesterday the struggling American carmaker Chrysler announced it was slashing its white-collar workforce by a quarter, citing “unimaginable times” in the automotive industry as sales of new vehicles evaporate. Chrysler is the smallest of Detroit’s big three carmakers, behind Ford and GM. Its chief executive, Bob Nardelli, said auto industry sales had never before contracted at such a rapid rate.

Chrysler is in merger talks with its larger, but equally troubled, rival General Motors. Up to 5,000 of the company’s white-collar payroll of 18,500 will be axed, partly through compulsory redundancies. The German Daimler group this week wrote down the value of its 20% stake in Chrysler from $268m to zero, as it issued its second profits warning of the year, saying sales of Mercedes had fallen sharply.

Yesterday, in France, Peugeot Citroen warned the European car market would tumble 17% in the current quarter. It issued a dire profits warning and said it would impose immediate and “massive” production cuts. Fiat reckons the fall in sales will be 20%, while Swedish bus and trucks group Volvo reported a 37% fall in profits as demand dries up all over the world.

The UK housing market – with mortgage approvals now down 53% on last year – is losing thousands of jobs every week, and not just builders and plumbers. Estate agents such as Rightmove are shedding jobs and JCB’s workers have just agreed a £50 a week pay cut to save 350 jobs.

The downturn has also moved online. Internet retailers had been continuing to rack up impressive growth while high street stores slowed down. But this week a survey by Capgemini showed online retailing up just 15% in September, compared with the 73% growth of 12 months ago.

Even Amazon, the world’s biggest web retailer, has cut back its three-month sales targets. Rival eBay has reported its first drop in sales and is cutting 1,000 jobs. Microsoft has also pared back its profits forecasts, while Yahoo is planning to axe 1,500 jobs after a 64% plunge in profits.

News reported by The Guardian, Julia Finch and Andrew Clark

Wall Street tumbled sharply following similar falls across Europe and Asia, before clawing back some ground.

The Dow Jones Industrial Average closed 3.6% down having gone more than 5% lower in early trading while the Nasdaq index finished 3.2% down.

On European markets, London closed 5% lower, Frankfurt slid more than 5% and Paris was down more than 3.5%.

Investors have been dumping shares worldwide because of gloomy prospects for the global economy – and are looking at other forms of investment.

Amid wider signs of the global economic slowdown:

– Asian shares tumbled, with Tokyo down 9.6%, Seoul plunging 10.6% and Hong Kong falling 8.3%. In Latin America, Brazil’s main market fell 7%
– Oil prices have continued to fall, despite Opec’s efforts to steady prices by cutting output by 1.5 million barrels a day. US, light sweet crude fell $3.69 at $64.15 . London Brent dropped $3.87 to $62.07
– The UK economy shrank for the first time in 16 years between July and September, confirming that Britain is on the brink of recession
– The pound saw its biggest one-day drop against the dollar since 1992 falling to $1.52, its lowest level in six years, before rebounding slightly to $1.58
– The euro dropped to $1.25, its lowest level for two years, on expectations of eurozone interest rate cuts and slowing economic growth
– In Moscow, share trading was suspended on both main share indexes until 28 October, after they plunged more than 10%.
– Investors are now trying to ascertain how deep the global recession will be and the impact on future growth

Global money markets have showed renewed signs of stress, despite the billions of dollars that central banks and governments have pumped into the markets in recent weeks.

Investors worldwide are worried about falling share prices and the possibility of companies defaulting on their debts.

As a result, they have been selling shares in markets across the globe and switching to less risky forms of investments, such as government securities.

‘Awful cycle’

On Friday, the yield on US Treasury bills fell – a sign that demand for them is high and investors are willing to earn lower returns in exchange for a safe investment.

However, there was one glimmer of hope and a sign that banks may be more willing to lend to each other. Three-month lending rates among banks in the US and Europe dipped slightly.

What’s the real impact of the economic slowdown? BBC News is taking the temperature across the UK in a special day of coverage

The rate for lending dollars over a three month period eased to 3.52%, though the fall was very slight – just 0.02%.

The rates have fallen steadily for 10 days, as confidence in the banking sector has been helped somewhat by all the rescue measures announced by governments.

“Investors are now trying to ascertain how deep the global recession will be and the impact on future growth,” said Chris Jarvis, at Caprock Risk Management, New Hampshire.

The dollar and yen both rose sharply against most other major currencies, kindling speculation that central banks might be forced to intervene to rein in volatile moves.

“You are seeing the currencies move as they would in any sort of full-fledged panic,” said Firas Askari, at BMO Capital Markets in Toronto.

“I think we have to be close to the end of this awful cycle. It’s usually darkest at the bottom,” he said.

News reported by The BBC

Output fell by 0.5%, according to the Office for National Statistics, a bigger-than-expected drop, knocking UK shares and weakening the pound.

The UK will be classed as being in recession if the economy slows in the fourth quarter as well.

The Prime Minister said other countries must play a part fighting the slowdown.

‘Once-in-a-lifetime crisis’

“This is a global financial recession and we’re fighting it every way we know how,” Gordon Brown said.

“But we need other countries to work with us and that’s what I’m also spending my time making sure other countries take the action that we’re taking to stop this becoming worse.”

Gordon Brown says the government is ‘fighting’ the recession

He said the government was putting more money into people’s pockets – including an increase of the winter allowance for pensioners and a £120 tax cut for basic taxpayers.

The fall in UK output has been blamed on the credit crunch, falling house prices and rising energy prices, which have forced consumers to tighten their belts.

Charlie Bean, deputy governor of the Bank of England’s rate-setting committee, the MPC, described it as a “once in a lifetime crisis and possibly the largest financial crisis of its kind in human history”.

UK shares tumbled further on the news, closing down 5%.

The pound was also affected, falling to $1.52 before recovering to $1.5889 – the first time it has fallen below $1.60 in the past five years.

Shock fall

The 0.5% fall in economic output is far greater than predicted and increases expectations of further interest rate cuts from the current level of 4.5% to ignite growth.

What’s the real impact of the economic slowdown? BBC News is taking the temperature across the UK in a special day of coverage

It is the biggest drop in UK gross domestic product (GDP) since the first quarter of 1990.

The services sector – which represents three quarters of the UK economy – fell 0.4%, the biggest drop in 18 years. Within the services sector, hotels and restaurants saw the biggest fall, down 1.7%, compared with an increase of 0.2% in the previous quarter.

Manufacturing output fell 1% while construction tumbled 0.8% compared to the previous quarter.

Market fear

“This is the day that the recession became real” David Cameron MP, Conservative leader

Analysts expressed their shock at the news and their desire for aggressive rate cuts.

Business group CBI said the figures were worse than expected and called for rates to be cut by half a percentage point at the next meeting of the MPC.

“My comment to traders is dive, dive, dive,” said Societe Generale’s Brian Hilliard.

“It is a very emphatic entry into recession which underlines the need for dramatic rate cuts, which we think the Bank of England will deliver.” He anticipated rates dropping to 2.5% by the middle of next year.

Rates could go as low as 3% by the middle of next year and possibly even lower, said UBS analyst Amit Kara. “The risks are that this is going to be a pretty severe recession.”

Return to 1990s?

BBC economics editor Hugh Pym said the figures raised fears we could be in for a recession very like the one in the early 1990s when unemployment hit three million.

He said it was unlikely to be just a technical recession (two consecutive quarters of negative growth), but could be a year or so of negative growth.

But the difference now is that interest rates are much lower, he added.

Deputy bank governor Charlie Bean told the Scarborough Evening News that the bank’s independence – and ability to set monetary policy – meant that the UK was in a better position than in the early 1990s.

Hard rain

DEFINING A RECESSION
A recession is widely accepted as a decline in a country’s domestic economic output or GDP for at least two consecutive quarters

Opposition politicians criticised the government for its handling of the financial crisis.

“Well, this is the day that the recession became real. We’ve had 10 years of being told no more boom and bust, 10 years of a government not putting aside money for a rainy day. Well that rainy day has now come,” he said, calling for more support for businesses,” David Cameron, the leader of the Conservatives, said.

The Liberal Democrats called for tax cuts for the poor and more interest rate cuts.

“These growth figures show that the credit crunch is hitting the real economy and harder and faster than was first feared,” said Liberal Democrat leader Nick Clegg.

News reported by The BBC

Well I have been thinking and for each news article I read I can normally try to see an upside despite the doom and gloom that is being offered. I think that this is important right now, as I have been very conscious of all the news reported lately on here, as being bad news, gloomy reports and all very much depressing stuff!

So I wanted to write a positive spin on some of the items around today to see what my readers of this blog think, so here goes:

Recession to hit the world!

This is a bad thing and no one likes a recession, well you could argue some do though. In a recession the World Banks usually put interest rates down a point or two, so if you are a home owner or more likely the readers of this blog, you are a property investor, then reduced interest rates is great news. Certainly, with my property portfolio, the 1/2 point cut was very welcome indeed on those of my mortgages that are not on a fixed rate – so bring on more cuts please Mr Bank of England! I am sure that all property owners will welcome this relief right now.

During a recession commodities prices are affected and in particular the one that is in most peoples minds is oil prices. Oil prices have dipped to around $66 per barrel this week, having been up at $147 only a few months ago. The price of oil has risen a bit today on the back of growing expectations that oil producers’ cartel Opec will cut output.

“The decision should not leave the producer countries in the situation where they will be joining the group of countries which are already suffering from the financial crisis.” Opec president Chakib Khelil

The value of US light crude recovered today by $1.63 to reach $68.38 a barrel on the back of this news. The likelihood is such that, despite Opec’s cut in production, the price of oil could drop as low as $60 per barrel – probably never thought possible back in July this year when the price was up at the $147 level!

However, the good news on this front is that we are already seeing reductions in pump prices, albeit slower than wished! This is not only good news for motorists, leaving them more money to spend in our businesses, but it also means that transport costs and especially for haulage firms, is cut too. This will all feed though the economy, thereby reducing inflation and leading to further cuts in bank base rates – Yet more good news for property investors!

Property crash, this must be bad news!

Not necessarily, where property prices are crashing, this leaves the market open for those investors looking to buy a bargain. This might seem a little mean, but it is a fact of life that there will always be winners, as well as losers in any market situation. So the good news here is not if you are a property seller, but if you are looking to buy.

The news papers report the bad news about repossessions, however, this does create a business opportunity to snap up a bargain or two from the banks when these types of property come to the auctions. Don’t get me wrong, I do feel sorry for the unfortunate people in the horrible position of having their home repossessed.

The travel and airline industry hit bad by crisis and oil prices

It is a little bit more difficult for me to see a good side to these stories, as we see US Airways and Air France-KLM have both reported heavy losses on their share prices due to the current economic slowdown. American airline US Airways has lost a staggering $865 million (£537 million) in it’s third quarter with shares falling over 14% to $7.28 (£4.50).

The European airline Air France-KLM’s shares have also taken a hammering on the markets when they plunged by as much as 11% to $15.55 (£9.59).

In these cases, the brave might say that the share prices have bottomed out and you can therefore pick-up these shares a low price. One has to be careful though when you look at what was happening with Italian airline Alitalia, as things can and do get worse so you could lose your money. However, after 9/11 in the US, share prices in all the major airlines tumbled, providing a fantastic buying opportunity for the brave and the prices recovered thereafter, making a lot of investors very rich indeed!

The other benefit these problems will have is that travel companies and airlines alike, will need to further streamline their businesses to make themselves more competitive. These streamlining measures will cut costs and thereby allow these companies to pass-on cost cuts to travellers. The airlines will have to put offers out there to encourage people to fly with them, which encourages competition, as all the airlines will need to remain competitive! Thereby, reducing prices further, because another benefit of the recession and the lower oil prices noted above is that airline fuel will be cheaper. Virgin Atlantic was one of the first airlines to cut it’s fuel surcharge on its flights, so a direct benefit to business travellers and to holiday makers alike.

Retail sales in September see a fall

Retail sales in the UK are now growing at their slowest annual rate we have seen in 2 1/2 years, as reported by the Office for National Statistics (ONS). The report shows that high street sales fell by 0.4% in September, taking annual growth to 1.8%, from 3.3% a month earlier. An example is that DSG International, which owns Currys and PC World, reported a 7% drop in sales in the half year to 18 October, which is partly due to lower margins.

This is obviously bad news for retailers themselves and the business owners concerned, however, for the consumer this is good news. The retailers will be holding more “Sales” and reducing prices to encourage people to buy – look at what Currys and PC World have said, they are selling at lower margins, which means they are having to cut the retail prices to encourage selling.

The good news is that we are seeing more of a slow-down, which will point more towards a further cut in interest rates by the Bank of England next time around, let’s hope so!

The Ernst & Young Item Club says the UK will shrink by 1% next year, before recovering in 2010 and growing by 1%.

The Item Club’s chief economist, Peter Spencer, told the BBC: “Recession is already baked in the cake.”

But one “bright spot” is that inflation is likely to fall, enabling the UK to cut interest rates further.

The group said that company profits had already been damaged by very high commodity prices.

While recent actions taken by the government to shore up the banking system are welcome, the credit crunch will hit the economy “very hard”, Ernst & Young warned.

Mr Spencer said: “Even if equity markets stabilise and we begin to see capital flowing around the international financial system again, we are still looking at a domestic and global economy that will be in recession for the next 12 months.”

Rising unemployment

However, Ernst & Young forecasts that with plunging interest rates, falling inflation, and a fundamentally strong economy, the recession will be “relatively short and shallow”.

“We desperately need a global solution given the heavy dependence of our banks and borrowers on cross-border banking flows” Peter Spencer, chief economist, Ernst & Young Item Club

The group is not alone in thinking the UK has entered a recession – which is typically defined as two quarters of negative growth.

A recent quarterly survey of 5,000 businesses by the British Chambers of Commerce (BCC) also said the UK was in a recession.

Companies are likely to see their profitability squeezed further, prompting firms to invest 5% less in 2009, the Item Club predicts.

As a result of the slowdown, widespread cuts in investment and employment are “inevitable”.

While the largest job cuts so far have been in finance and housing – the sectors most closely linked to the recent turmoil – the effect will spread further.

It said it expected unemployment claims would hit 5% by the end of 2009, double the rate at the end of 2007.

Credit ‘expensive’

The report comes after recent data from the Office for National Statistics underlined the weakening labour market.

The number of people out of work in the UK rose sharply in the three months to August by 164,000 compared with the previous quarter, marking the biggest rise for 17 years.

Until September, accelerating inflation had been a major concern – latest figures show the annual CPI rate reached a 16-year high of 5.2% last month.

But prices have fallen recently, most notably for energy, and analysts expect September’s figure to mark a peak.

However, real disposable incomes are set to remain flat in 2009, before rising in 2010, the Item Club said.

The research group forecasts that consumption will fall by 1.2% next year, with credit continuing to be hard to obtain and unemployment expected to rise.

The Item Club predicts house prices will fall 14% by the end of this year, and drop a further 10% next year.

Until the bottom of the market is reached and confidence returns the housing sector will be in “deep freeze”, it says.

“Last year consumers were able to handle the income squeeze by borrowing and dipping into their savings,” said Mr Spencer.

But this year “it is a very different story with credit harder to access and far more expensive”.

Fiscal policy

The Item Club said recent government intervention had pulled the UK back “from the brink” but the banking system was “in intensive care”.

Earlier in October the UK government set out a number of initiatives to rescue the banking system by making £400bn available.

But the report said that addressing problems in the UK’s finance system could not be dealt with in isolation.

“We desperately need a global solution given the heavy dependence of our banks and borrowers on cross-border banking flows”.

Longer term it said the recent financial crisis had left huge question-marks over bank regulation and governance, as well as fiscal policy.

News reported by The BBC

Inflation seems to be falling with world food prices dropping and the price of oil per barrel easing further this week to end at $71.75. Raw material prices, like steel, have also seen a drop as Tata cuts output at Corus this week due to weaker demand. And in the US it has seen the biggest fall in 34 years in its industrial production!

More woes for the travel industry with the Spanish airline LTE International suspending its operations this week after getting into serious financial difficulty.

The slowdown in the UK has affected retails store MFI, which is under the supervision of administrators Kroll after management took over the operations of the majority of the stores. The firm is trying to sell on the failing stores in MFI, but these will be closed if there is no buyer.

Northern Rock, is top of the “Repossession list” this week where it has seized 4,021 homes by the end of September, which has angered charities – with Shelter adding that “Shelter said repossessions should only occur if “absolute necessary” and that people should be given every assistance, including free independent advice, to help them stay in their homes. “

Good news on the petrol prices front with the price per litre falling below £1 this week when suppermarket chains Morrisons and Asda along with oil giant BP led the way when the price per litre was reduced to 99.9p.

If the oil price per barrel stays where it is, then petrol prices at the pump must come down still further – it only makes sense with the price per barrel dropping from a high of $147 to $71.75, a drop of more than 50%. So come on oil companies do your bit for the world economies, pass on the price reductions.

We also see an interesting contrast between the cola producing giants with Coca-Cola benefiting from strong demand in emerging markets, reporting a 14.5% rise in profits for the first quarter over last year. Whereas, Pepsi is cutting 3,300 jobs as their profits slide where the company saw third-quarter pre-tax profits fall 9.5% to $1.6 billion.

The world financial markets continued this week to be in turmoil with huge falls on the stock markets follwed by large increases too. The Dow Jones fell by 733 points overnight from a rally to 9,311 earlier in the week to close at 8,852 at the end of the week, which is up on the close from last week by 4.74%. The UK’s FTSE 100 saw similar volatility seeing large fluctuations in the week and ending up 3.3%.

End of the week saw:
Stock exchanges:
FTSE 100: 4,063
DOW: 8,852
S&P: 941
Nikkei: 8,694

Currencies
UK Sterling £ to US Dollar $ 1.73055
UK Sterling £ to Euro € 1.28542
UK Sterling £ to Aus $ 2.51025
US Dollar $ to Euro € 0.74278

Commodities
Crude oil – $71.75
Gold – 785.30

The output from US factories, utilities and its mines has fallen by 2.8% last month, this fall was made wost with a slow down due to the recent hurricanes, Gustav and Ike. There are now concerns that the US may already have entered a recession with the UK expected to go into recession by December and problems on continental Europe too.

There is good news where consumer prices have remained flat in the same month, which is a sign that inflation is beginning to ease and might lead to further cuts in interest rates to follow on from the recent round of cuts made by world governments.

There are also signs that world’s food price rises are slowing down and in some cases are falling, including meat and fish and fruit and fresh vegetables. This too will help to lowering inflation pressures and also, at a difficult time for consumers, ease the burden on household bills.

Problems in China

China is also being hit by the slow down and another Chinese toy manufactuer Smart Union has gone out of business with a loss of close to 7,000 jobs. The company, which supplies US business Mattel, has not paid wages to it’s employees which has angered the work force leading to protests and the police getting involved. So far in 2008 more than 50% of China’s toy exporters have gone out of business as a result of rising raw materials and labour costs.