Is a recession still likely at the end of 2023?

The cost of living crisis has been on everyone's lips for what seems like years now.

There's often talk of it turning into a recession, although so far, most countries have avoided this.

But could a recession still happen? Let's delve into what recessions are, how they're different to the cost of living crisis and when we'll hopefully see some financial stability.

What is a recession?

A recession is a period of economic decline, although it has several particular factors.


Generally, if a country has two consecutive quarters of economic contraction (otherwise called "negative growth") a recession could be declared.

Countries across Europe and North America have been stating that a recession is likely (or even imminent) for the last couple of years, ever since the COVID crisis caused lockdowns and restrictions across the world.

How is the cost of living crisis different to a recession?

A cost of living crisis is marked by high inflation causing a rise in everyday expenses - which we've seen across the world for things like food and fuel. Wages remain the same, which means that people all over the globe struggle for money.

A recession is a bit broader. As it's defined by two consecutive quarters of negative growth, it takes longer for a recession to actually be called.

Cost-of-living crises can still take place without negative growth, too, as even small amounts of positive growth can impact people unequally.

Is a recession likely?

So far, many countries in the world have managed to dodge a recession - but that doesn't mean that it's impossible that we'll face one.

In the UK, experts think that there is still a risk of a recession - but it probably won't last too long.

There's been a drop in the service sector and manufacturing output in the last couple of months due to interest rates rising.

The Bank of England's interest rate hikes, which have happened over the last year, have also negatively affected the economy.

In fact, Sandra Horsfield who runs Investec states that "The economy is entering more troubled waters and a [relatively mild and short-lived] recession is likely to ensue this winter."

In the USA, the outlook looks a little more optimistic, although investors remain unsure about the likelihood of a recession.

And across Europe, the answers are different again, with only 7% of forecasters predicting a recession this year.

How long could a recession last?

In general, recessions last between 2-18 months - however, this doesn't mean that the economy has recovered. In fact, they're often not back to their peak for years afterwards. 

For this potential recession, most experts are predicting that it will be relatively short and there will be some rebound in 2024.

That doesn't mean that the cost of living crisis is over - in fact, we aren't expected to have the same financial comfort as 2021 until 2027.

Tips for preparing for a recession
Want to prepare for a possible recession? Here are our best tips!

Ask for a raise

If you want a raise, there's no harm in asking!

If you've been in a job for a while and know you're doing a good job, schedule a meeting with your manager or HR department to discuss a possible increase in pay.

Earn some extra money

There are so many ways to earn extra money if you're short of cash!

Try out UserTesting (where you test new websites and apps and provide your feedback), join People for Research to share your experiences or spend time with animals by catsitting.

If you can afford it, you could put all of this side hustle money into a pot for fun activities. Then, you can still enjoy recreation in a recession!

Enjoy free or cheap fun

You don't need to spend money to have fun!

There are plenty of free ways to enjoy yourself, including having friends over for dinner rather than going out, visiting free attractions such as some museums and beaches.

‌Most people pay for the internet anyway, so you may as well use it!

Watching videos on YouTube is free, and there's something for everyone here - whether you enjoy history, travel videos or even watch a movie (some are available!).

There are also lots of free games available online.

While gambling is not a good idea when you're watching your finances, free casino games are an alternative.

Set a budget

Being realistic and organised with your budget can help you to ration your money.

Look at the amount you earn per month and write down your "necessary" expenses (rent, bills, food etc).

Then, write down your "unnecessary" expenses (Netflix, gym etc).

Then, work out how much money you have left, make tweaks if necessary and calculate how much you want to use for fun and how much you want to save!

So, is a recession still likely?

There's a few different opinions about whether a recession will happen across the globe.

But, it's true that the cost of living crisis could cause issues for a few years yet.

So, wherever you are with your finances, follow some of our steps to prepare and come out of this period of history feeling financially stable!