Over the past few months, financial bodies have predicted that we are heading into a recession; but what actually does this mean? A recession is simply a down turn in the economy. Our economy in its simplest form is a flow of money, when times are good, money changes hands very quickly but when financial uncertainty creeps in, the flow of money slows down. People are not willing to buy non-essential items and will often reduce spending on some essential items where possible. Because this money is no longer flowing, many industries will struggle to manage their own cash flows and may in turn need to make people redundant to cut costs. This fuels the crisis further by reducing the number of consumers in the market. The snowball effect will gain momentum until the banks and the government intervene and reduce interest rates. This is intended to make commodities more affordable and promotes consumer spending. Once this begins, the markets will slowly start to recover. Its a boom and bust world.