Unfortunately, we’re now in a recession. But just what is a recession? And what happens during a recession? Well, with the IMF starting the year by issuing a stark warning that a third of the world will be in recession by the end of 2023, including the world’s three-largest economic blocs: the US, Europe and China.
With all of that in mind, in this article, we’ll cover:
- What is a recession?
- What happens during a recession?
- What exactly is happening now?
- How is it looking for B2B in 2023?
- How long will this recession last?
1. What is a recession?
A recession is, in short, an economic downturn. The economy shrinks. The general definition of a recession is two consecutive quarters of negative growth; basically, shrinkage. When things go into reverse for six months, it has knock-on effects elsewhere. This is what a recession is.
Recessions last for differing periods of time. Some, like the 1980 recession in the US, are short, sharp shocks. But some, like the Great Recession in the EU, are more protracted. How long a recession lasts depends on quite a few external factors. You can find out more about that here.
Read also: What causes a recession: Top 5 main reasons for a recession
2. What happens during a recession?
The first thing to be affected by a recession are assets. They drop in value quite significantly. An asset can be something like stock prices, or property values. Another common occurrence is that central banks raise their rates. The Bank of England recently did this to the British economy. Rate rises and asset value drops often lead to a drop in consumer confidence – and this is the big one for businesses.
Consumer confidence is a term we hear a lot during recessions. But what does it actually mean? Essentially, random households in any given country are surveyed. They’re asked a series of questions about their thoughts on the current economic picture. Much like political polling, this is then generalized to a wider chunk of the population.
When consumer confidence drops, people are less likely to spend. This means that less money is pumped into the economy by both the general public and investors.
This is a general overview of what happens during a recession. So what’s actually happening now?
3. What exactly is happening now?
It’s different in different parts of the world. So, for this article, we’ll look at what’s happening in Europe during this recession.
The big thing happening during this recession is that energy markets have gone wild in Europe. Russia’s full-scale invasion of Ukraine has led to a huge spike in energy prices across the continent as the EU and UK seek to end imports of Russian gas, oil and coal.
Gas prices in Europe have now stabilized, but the high prices throughout 2022 have had a major impact. This could mean that countries that use the Euro, which include Germany and France, could well go into recession this year.
Across the water, the UK’s high interest rates, cost of living crisis, and lower post-pandemic output could well mean that it has the deepest and longest recession amongst the world’s largest economies.
All of what’s happening during a recession can seem pretty macro, so what does all this actually mean for B2B in 2023?
Read also: What to do when you get laid off
4. How is it looking for B2B in 2023 during a recession?
Now you might be forgiven for feeling down after reading that. But all is not as bleak as it seems.
Times are getting tougher for businesses. The sheer number of layoffs we saw in the second-half of 2022 nicely shows that. Businesses are looking to tighten their belts, and cut their costs.
The situation is more severe in some countries than others. But for each individual B2B company, it comes down to a simple question: can you position your solution as being a “need to have” instead of a “nice to have”?
Doing that doesn’t just take great messaging from your marketing team. Equally essential is that your salespeople take the time to work out how your solution benefits each individual prospect, and pitch it accordingly. In these tough times, there’s no ‘one-size-fits-all’ approach to prospecting.
You could also invest in tools that more than one use, replacing multiple tools with only one subscription. Take Oneflow as an example. On the surface, it’s a contract management platform. But Oneflow comes with a ton of features that can help automate a lot of the pre-sign process.
Whether it’s having ready-to-go templates, our chronological signing order feature, or our live edit function, your contracts can be good to go quickly. The live edit function even works after it’s sent, so there’s no need to hold things up with endless PDF-based email chains anymore.
Oneflow isn’t just contract management software, it helps you sell and do more more quickly, essential as we head into 2023.
2023 won’t be the easiest year, but things also won’t be bleak forever.
5. How long will this recession last?
Unfortunately, there’s no lightbulb moment when a recession ends. After all, that’s what a recession is. Fortunately, economists can put together forecasts as to what will happen next. And those forecasts aren’t all doom and gloom.
Current forecasts suggest that 2023 will be a turbulent year, but that the global economy will be heading into recovery by the end of it. Expect major movements on the stock market, and some truly incredible swings in inflation as a result. But by the end of the year, we’ll be on the road to recovery.
Some economies, however, like the UK or Sweden, will take longer to begin their recoveries, and will still be slow well into 2024. As for how long assets, like property or cryptocurrency take to begin their recoveries? Well, that one remains to be seen.
Read also: 7 tips on how to sell during a recession
The key takeaways
2023 will be a rough ride. After all, this is what happens during a recession. But there’s likely to be a recovery toward the end of the year. How the recession will look depends very much on where in the world you are.
Europe will be hit, with the Eurozone and the UK seeing a recession exacerbated by the full-scale invasion of Ukraine, with some countries not seeing a recovery until 2024.
In the tech sector, we’ve seen a lot of layoffs as people look to cut costs. This is what happens during a recession. But one great way to cut costs is to invest in tools with multiple functions, like Oneflow.