The UK economy is set for a \u00a335bn hit from the Middle East energy crisis and could enter a recession this year if the crisis drags on, one think tank has warned<\/a>. Meanwhile, another alarming report has predicted that a quarter of a million people will lose their jobs<\/a> by the middle of 2027, should the UK\u2019s economy flatline. Factor in a predicted surge in interest rates and the cost of living, and the dark clouds gathering are only getting darker.<\/p>\n So what can you do today to prepare for more straitened times tomorrow? Rajan Lakhani is a money expert at personal finance app, Plum. Here are his tips on how to recession-proof your life. <\/p>\n 1. Face your finances <\/p>\n It\u2019s a well-documented behavioural trend that when the economy is poor, people experience financial avoidance<\/a>, where they hide from their worsening finances rather than dealing with them. But this is the worst thing you can do for your financial health. Instead, do a monthly audit of your essential and non-essential payments now. There is so much support available to make managing expenses easier, whether that’s using an app to automate your payments or simply provide an overview of your finances. <\/p>\n 2. Know your worth <\/p>\n Most people could do with extra cash right now. But when asking your employer for a raise, it\u2019s important to go to them with evidence that proves that you\u2019re being paid below the market rate. Your end-of-year review is an opportunity to discuss your pay and whether it\u2019s commensurate with the work that you\u2019ve been doing. But make sure that you are benchmarking against similar salaries elsewhere in the industry. An evidence-based, substantiated approach will put you in a stronger position to make the most of that discussion and, if they do push back, potentially find a compromise.<\/p>\n 3. Think before you quit<\/p>\n While it can be tempting to jump ship to another company altogether when the one you\u2019re working for won\u2019t give you what you want, look at the long-term picture rather than the immediate (and often minimal) salary increase. You might find that your route to progression elsewhere is slower, so you don\u2019t see that medium to longer-term benefit in your salary as well. A smaller pay increase at your current job may actually be better if there are opportunities to grow, professionally and financially. <\/p>\n 4. Focus on your emergency fund <\/p>\n In 2027, the job market is predicted to endure its biggest hit since the pandemic. To allow some breathing room, aim to save between three to six months of expenses as a buffer. Don\u2019t invest that money \u2013 it\u2019s for emergencies, so it needs to be liquid; something that you can rely on when you need it in the short term. The Bank of England\u2019s rate hasn\u2019t dropped \u2013 so many savings accounts offer around 4.25 per cent \u2013 or more. So, even if the money isn\u2019t invested, it will grow. <\/p>\n 5. Increase your income streams <\/p>\n Almost one in five people across Britain now take on additional work alongside their full-time employment or make cash using \u201cside hustles\u201d or from a passive income. These can include selling unwanted clothes and furniture on second-hand sites like Vinted, Facebook Marketplace, Gumtree and eBay or freelance work like designing, writing or pet care to raise extra funds. Think about your skills: if you like crocheting or knitting, for example, there is a bigger premium on handmade items. Are you handy? Could you advertise yourself as a handy person? Babysitting, renting out your car, or a spare room? The smallest amounts add up. Having a second, alternative source of income to fall back on \u2013 even if it\u2019s small \u2013 gives you some additional security.<\/p>\n 6. Prioritise high-interest debts <\/p>\n While saving might feel good, there\u2019s no point squirrelling your money away into an ISA if other high-interest debts \u2013 whether a loan or a credit card \u2013 are costing you more than you\u2019re putting away. It\u2019s really important to look at those high-interest items and make sure you\u2019re paying in full to mitigate the interest. If you have a high credit score, you might be able to move your debt to a zero per cent credit card or a personal loan with a cheaper interest rate, which means you can use more of your finances to pay down the debt rather than making the minimum payment and just paying off interest.<\/p>\n 7. Anticipate an increase in expenses <\/p>\n Things are going to continue to get more expensive \u2013 there\u2019s little benefit in pretending that they\u2019re not. So prepare for costs to increase to avoid the rug being pulled out from under you further down the line. If you\u2019ve had a long-term mortgage that\u2019s coming to a close, the rate at which you\u2019re on is likely to be around double what it was previously. Try to take into account these higher costs when budgeting. Water bills are likely to increase<\/a>, as are broadband and mobile phone bills.<\/p>\n 8. Minimise household bills <\/p>\n New research <\/a>shows that British households have, on average, paid an extra \u00a33,400 in energy bills since the start of the surge in gas bills in late 2021. Loyalty can be costly, so it\u2019s really important to keep on top of your financial admin and make sure that you\u2019re not overpaying. Find the best deal possible by comparing suppliers. Energy prices are expected to increase again in July because of the Iran war, so make sure to look at all the options if your deal is nearly up. <\/p>\n 9. If you\u2019re already investing, don\u2019t stop <\/p>\n As financial experts predict a global stock market fall<\/a>, don\u2019t panic and pull your money out of your existing investments. Instead, keep that long-term trend of feeding money into the markets going and that will smooth out some of the bumps in your investments. But this must come after reducing your debt and adding to your emergency fund.<\/p>\n 10. Be property savvy<\/p>\n Bank of England figures have shown that homebuyer mortgage approvals increased in February \u2013 but that mortgage rates have been volatile ever since<\/a>. When it comes to the mortgage market, it’s going to be difficult to find rates that are lower than the ones we saw in February. You can put yourself in a better position by building your credit score and not making any significant purchases.<\/p>\n If you already have a mortgage and it\u2019s up for renewal, start looking at the market six months before to understand the available rates. You can always reserve a rate if you think they will go up, and then switch to a lower one nearer the time. If you\u2019re retired and your children have left home, it might be a good time to consider downsizing as that will unlock some more money. Many pensioners have been forced to return to work or take on part-time jobs<\/a> as the cost of living prices them out of retirement. <\/p>\n 11. Keep paying into your pension <\/p>\n When you\u2019re short on cash it can be tempting to stop paying into your pension but it\u2019s never been more important to resist that urge. When you get closer to retirement, consider withdrawing the 25 per cent tax-free lump sum<\/a> and keep the remaining money invested for as long as you\u2019re comfortable. The closer you get to retiring, the more of your money becomes cash. If you\u2019re nervous about the current economic environment, then you may want to take the cautious route and not have so much directly in the market. <\/p>\n 12. Take one step at a time<\/p>\n![\"Lynette](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/05\/Screenshot-2026-04-30-at-09-36-48.png\")
Lynette Scavo in despair over her bills in ‘Desperate Housewives’ (ABC)<\/p>\n![\"Marisa](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/05\/industry-hbo-1-082824-0cc5a58d5d5647a5856a804dca19e6f8.jpg\")
Marisa Abela as trader Yasmin Kara-Hanani in ‘Industry’ (HBO)<\/p>\n