The current talk is of recession and general doom and gloom for the economy. But are we really heading for one and if so, what does it mean and how can we protect ourselves? Financial expert Jasmine Birtles from www.Moneymagpie.com gives us the lowdown

What is a recession?

Technically, a recession happens when we have economic decline for at least six months in a row. However, very often just a sharp slowdown in the amount people are earning and spending can feel like a recession. That's the way it's feeling now.

The last time we had a recession was 1990-92 when house prices plummeted, many home owners had 'negative equity' (where the value of your house is less than your mortgage) and unemployment rose. Since then we had a bit of a downturn after 9/11 but not enough for it to be a proper recession. Now, economists are talking about the possibility of a global recession happening some time before the end of 2009.

Are we heading for one?

It's possible. No one knows for certain yet but what everyone is saying, including Mervyn King, the Governor of the Bank of England, and Gordon Brown himself, is that it's going to be a tough year economically.

There are many reasons why we could have a recession, including the fact that the United States seems dangerously close to recession and consumers here have really reined in their spending on the high street . However, the Government and the Bank of England may be able to stave off a really bad slump in the next month or two if they make the right decisions.

How can I protect myself if it does happen?

The most important thing to do in times of economic slowdown is to get out of debt as quickly as possible. If you currently have debts that you're not coping with then get help as quickly as possible. Maybe you have a canny friend who can go through your bills and statements with you to see where the problem is and to set a budget with you.

If not, then contact one of the free advice services around like the Citizens Advice Bureau or the Consumer Credit Counselling Service. They will give you free, impartial advice and can even negotiate with your creditors for you and help you set a budget to cut down your spending and pay off your debt.

Whether you're in debt or not, though, you should certainly cut down on your everyday costs. This is something that we should be doing at any time anyway, but it's especially important in times of economic instability.

• Switch all your bills to cheaper versions. That includes gas and electricity, mobile phones, landlines, TV and broadband packages, insurance and even your bank account. Use the internet to search better deals and set yourself the goal of saving at least £500 over the year just by switching.
• Cut down your day-to-day spending. Lower food bills by shopping at markets instead of supermarkets. You can save 30 per cent on your spending that way. Also, use what you've got in the cupboards and freezer before you buy more. Tell yourself that you will only buy food to go with what you've got already until you have used it all up. Then you can stock up again.
• Cut out impulse-spending. Save £25 a week by making sandwiches rather than buying lunch at work. Save another £15 a week by using a cool flask of coffee rather than buying over-priced versions at coffee chains.
• Get as much as you can for free. There are loads of free samples, vouchers and testers that you can get online. Sites like www.freebietown.co.uk, www.britishfreebies.co.uk, www.freestuffjunction.co.uk and www.free-stuff.co.uk are worth signing up to for free things regularly. Also, look at the regularly updated 'free stuff' article on www.Moneymagpie.com which is updated each week.
• Go green. You can save a lot by cutting your fuel costs and helping the environment at the same time. Change light bulbs to the long-lasting ones, wear a jumper and put your heating down by one degree, insulate your loft and stop all drafts around doors and windows. Over a year, all these small changes can save you hundreds of pounds.

Also, when times are hard, and jobs are looking a bit jittery, it's really important to make some extra money to pay off debts or pay for little extras.

• Make money from your home. Rent out a spare room if you have one. You can make £4,250 a year from that without having to pay tax. Rent out your driveway or garage if you don't use it. Put it on www.parkatmyhouse.com so that would-be parkers can find you and pay you to park there.
• Go through your junk and sell it on eBay. Put unwanted Christmas presents there if you haven't already and maybe even start buying collectables at car boot sales and charity shops to sell for a profit on the auction site.
• See if you can get overtime at work or pick up some evening or weekend work here and there. Try some babysitting through www.topnotchnannies.com. Or take up dog-walking, a bit of shop work locally or even some taxi-driving.
• If you're good with your hands, make things to sell at markets and car boot sales. Bake cakes and sell them. Make jewellery and set up your own marketplace on eBay. Grow plants, including herbs, and sell them at your local market. Make greetings cards and sell them at local shops.
• Get more money-making ideas every week by signing up to the Moneymagpie newsletter here.

  Is there a good side to a recession?

  If you have some spare money, then yes actually! During a recession, many businesses find it difficult to get sales so they offer all kinds of discounts. Remember, you can haggle even in high street stores, particularly if you are offering cash payments rather than credit card. Try it, they can only say no, and you might get a 10 or 15 per cent discount.

  Also, travel operators, fashion stores and other 'luxury' goods sellers will have to bring down their prices to get more business, so keep your eyes out for bargains through the year. You should be able to get more things for less money if you keep checking prices and wait for things to come down.