Recession effects on the railway.

[AverageJoe]

I follow a few financial and social media channels.

A few of them are predicting a recession.

Of course this could all just be doom and gloom scare mongering.

But in the event that it did happen, what impact would it likely have on the railway? And what happened with past recessions regarding passenger numbers and job security for railway staff?

 

[43066]

I follow a few financial and social media channels.

A few of them are predicting a recession.

Of course this could all just be doom and gloom scare mongering.

But in the event that it did happen, what impact would it likely have on the railway? And what happened with past recessions regarding passenger numbers and job security for railway staff?

Might have an impact on the freight side - and indeed I think that has already been felt in some quarters.

Otherwise passenger numbers are growing strongly, and the population will continue to grow even if we tip into a recession, so hard to see too much impact, certainly at the franchised TOCs.

And what happened with past recessions regarding passenger numbers and job security for railway staff?

We actually had a short recession in the second half of 2023, and passenger numbers were growing throughout. No discernible effect on staff numbers.

 

[Leuvenn]

Of all the industries, the railways are the most reselient to adverse economic situations. It's not just the unions, it's our place within the transport industry. Without the railways, economic growth becomes fairly difficult to maintain, with as much as 20% of the nation relying on passenger rail networks on a daily basis. Just a scant look at other sectors like manufacturing, retail and hospitality- where workers have been made redundant simply to satisfy shareholder interests- will tell how bad things can be.

I will add one thing, however: It pays to be prudent. There is no guarantee that the railways won't be defunded like it was during the BR Days, and I would take it for granted that wage growth will remain stubbornly low. Be prepared to go without a few luxuries; be content with less and save as much as you can to avoid any crisis.

 

[Horizon22]

Passenger numbers did drop after 2008 recession, so I wouldn't say there will be no impact. Also economic output tends to drop across the board, so all travel tends to reduce (including car journeys and flights as an example).

That being said the passenger mix is not what it used to be with fewer business travellers and more leisure travellers post-Covid.

What is likely is that services will probably be less packed and there might be some very small adjustments. There's a very slight chance of maybe things like driver recruitment slowing down a bit, but it certainly wouldn't grind to a halt.

That being said, the OBR and IMF are not predicting recessions, just slow growth so I would caution on believing what "a few financial and social media channels" are saying.

 

[AverageJoe]

Passenger numbers did drop after 2008 recession, so I wouldn't say there will be no impact. Also economic output tends to drop across the board, so all travel tends to reduce (including car journeys and flights as an example).

That being said the passenger mix is not what it used to be with fewer business travellers and more leisure travellers post-Covid.

What is likely is that services will probably be less packed and there might be some very small adjustments. There's a very slight chance of maybe things like driver recruitment slowing down a bit, but it certainly wouldn't grind to a halt.

That being said, the OBR and IMF are not predicting recessions, just slow growth so I would caution on believing what "a few financial and social media channels" are saying.

I agree about not getting to carried away with what they are saying.

But it’s always good to be prepared and since we have had a recession in the past I thought tapping in to the experience of the rail staff on this forum would prove insightful.

 

[dk1]

In the past railways have tended to follow the economy with things like first class dipping and both business and leisure travel muted. The latter doesn’t seem to happen so much now though as people always seem to be able to find the money for extras in life.

The last few years get continually blamed on the after effects of the pandemic but the fact we’ve been bordering on a recession gets glossed over and largely ignored for some reason.

 

[Magdalia]

Far too many people get hung up on the recession label, including lots who really should know better.

The UK economy has only had very weak economic growth since the 2008 financial crisis, especially when considered in the context of a rising population. On a per head basis GDP is lower now than it was in 2019 before the pandemic. Whether growth is just below 0% for two quarters, instead of just above, doesn't have a significant economic impact.

In the past the railway was very vulnerable to the impact of recession because freight traffic and both commuting and business travel would reduce significantly. For example the volume of coal moved from collieries to power stations, and steel industry traffic, were highly vulnerable to changes in economic activity.

I'd agree that the railway is now much less vulnerable to swings in economic activity. That's partly because of the changed mix of traffic, but increased income and wealth inequalities are also significant. For lots of people the "cost of living crisis" is very real, and those people's economic behaviour is already typical of a recession. But on the other hand there are also lots of people not feeling the "cost of living crisis" and they are carrying on spending, including travelling by train. They aren't going to stop just because growth is just below 0% for two quarters, instead of just above.

 

[Leuvenn]

That being said, the OBR and IMF are not predicting recessions, just slow growth so I would caution on believing what "a few financial and social media channels" are saying.

They also predicted that the post-Covid inflation was "transitory". The job of these organisations isn't to be impartial, it's to support the work of governments.

Recessions are a fact of capitalism. The question is not if but when.

 

[Topological]

An ongoing tough economic time is not in doubt. That has not been in doubt for a very long time (long before the growth figures came in).

This would be an opportunity to show how rail can be central to recovery, but I doubt that will happen. Rather, we will get small cuts and managed decline. The only difference from the recession will be that there is something to blame.

 

[Krokodil]

Passenger numbers did drop after 2008 recession, so I wouldn't say there will be no impact.

Though that was the deepest recession since WWII so it's an extreme example which isn't likely to be the case this time.

 

[Meerkat]

A recession will be a bigger problem for a nationalised railway. Tax take goes down, Treasury needs savings............upgrades canned, services slashed, maintenance holidays, stock orders reduced/cancelled.

 

[yorksrob]

We seem to have been continually in, or bordering on a recession since 2008 if the commentators are to be believed.

 

[greyman42]

We seem to have been continually in, or bordering on a recession since 2008 if the commentators are to be believed.

Agreed, and at the moment people are apparently having to choose between heating and eating, not that you would guess so.

 

[Magdalia]

at the moment people are apparently having to choose between heating and eating

Some people are having to make that choice.

not that you would guess so.

But, in most cases, they are different people to those you see travelling on trains.

 

[coppercapped]

A recession will be a bigger problem for a nationalised railway. Tax take goes down, Treasury needs savings............upgrades canned, services slashed, maintenance holidays, stock orders reduced/cancelled.

This is very true and experience bears it out, the 1991 recession being a classic example. Although the drop in Gross Domestic Product was about 1%, about half of that seen in the 2008 recession, the drop in economic growth and the accompanying inflation took place over a longer period.

So, not only did the Government's tax income drop but its expenditure on welfare payments (unemployment payments and so on) increased. All sorts of capital expenditures were cancelled or stretched out. On the railways the hoped for update on the West Coast Main Line was abandoned, track and electrification improvements were cancelled as was the InterCity 250 train project.

The 1991 recession also contributed to the development of the privatisation programme in that the growth seen in the previous two or three years suddenly disappeared; the government hoped that private companies would be able to squeeze more costs out of the system so reducing the call on Treasury funding. At the time the attitude was that of 'managed decline', the dramatic growth in passenger traffic starting in 1992/3 was neither foreseen nor planned for.

 

[yorksrob]

Agreed, and at the moment people are apparently having to choose between heating and eating, not that you would guess so.

The moment things look slightly better, the economy will be "overheating" and they'll have to put interest rates up fifteen points

== Doublepost prevention - post automatically merged: 12 Dec 2024 ==

This is very true and experience bears it out, the 1991 recession being a classic example. Although the drop in Gross Domestic Product was about 1%, about half of that seen in the 2008 recession, the drop in economic growth and the accompanying inflation took place over a longer period.

So, not only did the Government's tax income drop but its expenditure on welfare payments (unemployment payments and so on) increased. All sorts of capital expenditures were cancelled or stretched out. On the railways the hoped for update on the West Coast Main Line was abandoned, track and electrification improvements were cancelled as was the InterCity 250 train project.

The 1991 recession also contributed to the development of the privatisation programme in that the growth seen in the previous two or three years suddenly disappeared; the government hoped that private companies would be able to squeeze more costs out of the system so reducing the call on Treasury funding. At the time the attitude was that of 'managed decline', the dramatic growth in passenger traffic starting in 1992/3 was neither foreseen nor planned for.

It will be interesting to see whether the leisure oriented railway will be more or less recession proof than the old commuter/business oriented one of beloved memory.

 

[Philip]

Passenger numbers did drop after 2008 recession, so I wouldn't say there will be no impact. Also economic output tends to drop across the board, so all travel tends to reduce (including car journeys and flights as an example).

I wouldn't agree with this based on my own experiences both working in the industry and in leisure travelling; trains seemed busier in 2009 than they did in 2007, and station footfall & ticket office sales figures at the time generally reflected this.

 

[Horizon22]

I wouldn't agree with this based on my own experiences both working in the industry and in leisure travelling; trains seemed busier in 2009 than they did in 2007, and station footfall & ticket office sales figures at the time generally reflected this.

It was actually 2009-2010 that saw the drop, but it's the long tail of the recession from 2008 as all the impacts were not immediate. Annual journey numbers below:

2007–2008	1,223,235,485	6.36
2008–2009	1,271,934,558	3.10
2009–2010	1,264,168,068	7.62

 

[43066]

Agreed, and at the moment people are apparently having to choose between heating and eating, not that you would guess so.

Surely it isn’t hard to understand that there are some people who are struggling. The fact that certain other groups of people aren’t has no bearing on that - you aren’t going to see them travelling extensively, living it up in restaurants and bars etc.

It was actually 2009-2010 that saw the drop, but it's the long tail of the recession from 2008 as all the impacts were not immediate. Annual journey numbers below:

2007–2008	1,223,235,485	6.36
2008–2009	1,271,934,558	3.10
2009–2010	1,264,168,068	7.62

Probably fair to say the impact wasn’t that strong because the growth in prior years had been so spectacular, and of course growth rapidly resumed in as numbers were up to 1.643bn in 2014/15:

Historical national rail passenger journeys in the United Kingdom 2024 | Statista

In the fiscal year 2023/24, more than 1.6 billion passenger journeys were made on national rail services in the UK. This represents a nearly 20 percent increase compared to 1,300 million passenger journeys made in the previous period. Passenger numbers had been particularly low during the...

www.statista.com

Characteristic	Number of journeys in millions
2023/24	1,612
2022/23	1,348.8
2021/22	990.1
2020/21	387
2019/20	1,731
2018/19	1,744
2017/18	1,695
2016/17	1,719
2015/16	1,705
2014/15	1,643
2009/10	1,258
2004/05	1,040
1999/00	931

(Source shows passenger growth numbers in millions from 1999/00 - 2023/24).

 

[DM352]

Is different now with TOCs stuck with leases but think in BR day recessions, some stock allocation used to be reduced by being transfered out to other areas. For example, class 321/4 Northampton Line had 11 units to Great Eastern around 1991 then seemed short when things picked up. Same may have happened with some 319 Thameslink units going on the short Victoria Beckenham jct route.

 

[317 forever]

We seem to have been continually in, or bordering on a recession since 2008 if the commentators are to be believed.

Indeed, there were 2 recessions in the 2019-24 Parliament alone, in mid-2020 and at the end of 2023.

Admittedly the 2020 one was due to Covid lockdowns. Then in terms of growth, we were effectively already out of recession by the time the late 2023 recession was announced.