Page 4: Downturn and recession
During a boom it may be difficult for organisations to supply the growing demand for goods and services. This particularly applies to the capital goods industries where increasing demands for equipment result in delays in meeting customer needs. Then as the rate of growth slows down, economic activity slows down, leading to a downturn. Where there are two successive three-month periods of negative economic growth, the economy is in a recession. This causes the size of markets to shrink. People have less to spend and there is pressure for organisations to reduce costs to survive. Within a recession:
- there is reduced demand for goods and services
- unemployment increases as jobs are cut
- people have less disposable income
- some businesses may be forced to close.
Government spending cuts
The recession in recent years has increased demand for the services that There for You offers. For example, it provides guidance and support, both financial and non-financial, to its members who experience low incomes. This may be due to rising redundancies or a reduction in benefits due to the government’s benefits reforms. Government spending cuts have also seen legal aid and citizen advice services reduced. This has increased the demand on the services that There for You offers UNISON members.
During 2012, There for You provided more than 4,000 grants to its members who needed assistance. Job cuts, reduced hours, pay freezes and reduced benefits put a strain on household budgets and finances. This was made worse by soaring fuel and food costs with many UNISON members finding it difficult to put food on the table, let alone pay for travel to work. In 2012 UK disposable incomes fell to a 9-year low. Support payments to members increased by 45% as many members simply ‘ran out of money’.
There for You offers small grants to support low income families to provide children with school uniforms at the start of a school year and to help with household bills. With winter fuel costs rising by as much as 388% on the previous year, There for You’s small grants programme supported countless vulnerable individuals and families. Normally the government would increase its spending during a recession, to stimulate demand in the economy. However, its commitment to ‘austerity’, with cuts rather than increases in spending and benefits, have meant that the demand for There for You’s services have been greater than ever before.