Was a Recession on the Cards Before Covid-19?

Was a Recession on the Cards Before Covid-19?

The true impact of Covid-19 is yet to be defined but we can all be sure it will be a hard pill to swallow. While we are all at home staying safe with our loved ones the economic impact can feel like a distant prospect, but we all need to be prepared for a period of darker times.


In 2015 Paul set up Vantage and made 40 predictions regarding the economy and property market compiled by talking and listening to respected individuals such as St Brides Asset Managers, Peter Bill the former EG editor and the Bank of England guidance. 75% or 30 of the 40 predictions I made came true.

Two quotes resonate when looking at the markets;

“The farther backward you look, the farther forward you see” Winston Churchill
“You cannot connect the dots looking forward, you can only connect them looking backwards”  Steve Jobs.

There can be no denying it an economic pattern exists, and the property industry moves with the economic cycles. Boom and bust are as inevitable.

If we look back at the time since the last recession, we’ve been riding the wave for quite some time and as Alan Carter of Investec once said about the 2008 recession “companies just surfed all the way up the increasing asset values during the boom”. Time frames are the most obvious factor and circa 10-years post 2008 the writing on the wall was starting to be clear to many.

It was also said by the International Monetary Fund in 2019 that the markets had improved but Gross Domestic Product globally was starting to look like it was in a poor state.

The more people we have talked with, it can’t be denied most of us just don’t learn from the lessons of the past, as Nick Thomlinson former Senior Partner at Knight Frank once said “every fifteen years there are a new set of people in corporate finance who weren’t around the last time. By then, the lessons have been forgotten. Even those people who were around are driven by the bonus culture”.

This lack of looking back and connecting the dots was confirmed by Chris Sullivan, former deputy chief executive of RBS “bankers don’t learn the lessons. Big institutions don’t learn the lessons of the cycle. If I look through my career – four cycles, four recessions – the same mistakes were made by banks in every single one of them”.

Over the last 18 month a clear pattern started to develop as predicted in 2015, the clients inevitably start to get younger with a new breed of firms, asset managers and fund managers coming through. Following the desire to keep pushing and bonus culture takes hold so we can all buy bigger cars and houses. Life is ever far from cheap and an entitlement culture can take hold.

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Whether we can all continue to lead such prosperous lifestyles for a while is unknown. The big surveying firms are as ever saying what we all want to hear, that we will bounce back just as quickly as we fall, but have we ever really done so?

Robert Houston of St Brides Asset Managers made a great observation this week “The standard variables to recovery are normally… how long, how deep and how costly? But this time, we have an additional human variable… how many?” Covid-19 and its economic impact is a new chapter for us all.

In short, the last cycle has been good to us but the party was starting to come to an end. Covid-19 has been the final nail in the coffin and seen us plummet into a global recession which currently we do not know the true impact of and probably will not until later this year.

Warren Buffet made a statement that “honesty is a very expensive gift, don’t expect it from cheap people”. If we are all honest with ourselves, we know the next few years will be tough so let’s stick together and see this out in as positive a manner as we can.

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