Tomorrow (13 February), preliminary knowledge for UK GDP from This fall final yr will probably be launched. Economists surveyed count on it to point out a 0.1% fall. With early indications that the begin to 2025 hasn’t been a lot better, one other destructive studying for Q1 would put the UK right into a technical recession. For an investor involved about this danger, listed here are two FTSE 250 shares to contemplate.

Important items bought

The primary firm is B&M European Worth Retail (LSE:BME). The enterprise sells low-cost homewares, backyard merchandise, toys and extra by way of big-box shops. It trades each with companies and on to the general public.

Given the bulk-buy, just-about-essential nature of products bought, it’s a defensive inventory. What I imply by that is that if we get a recession, buyers would possibly promote riskier development shares and purchase B&M shares to attempt to shield themselves. Demand for the products ought to stay agency even throughout a downturn. Let’s be trustworthy, even when funds get tight, we nonetheless want to purchase issues like bathroom roll and dishwasher tablets!

The corporate may gain advantage from customers buying and selling down throughout robust instances. For instance, whereas a buyer would possibly now purchase branded merchandise, throughout a recession they could reduce prices and purchase from B&M as a substitute.

The share price is down 35% over the previous yr. That is partly on account of a latest decreasing of the annual revenue forecast as like-for-like gross sales within the UK fell by 2.8% in Q3. Though it is a danger going ahead, the enterprise continues to be on account of submit an annual core revenue of over £600m, so I don’t really feel buyers ought to be overly troubled by this.

If something, the share price drop, which put the inventory final month on the lowest stage since November 2022, may symbolize a superb worth buy.

Safety from utilities

A second concept is Pennon Group (LSE:PNN). The agency is a UK-based water and waste administration firm, which primarily operates in by way of its subsidiary, South West Water. The inventory is down 12% during the last yr.

It makes cash by way of the availability of the water and wastewater companies to each residential and industrial prospects. It’s a enterprise mannequin that has confirmed to be worthwhile over a few years. Because it’s a mature firm, it does depend on paying out dividends to maintain buyers completely satisfied. In the intervening time, it has a beneficiant 7.81% dividend yield.

Traders may discover this defensive inventory interesting, as even throughout a recession prospects will nonetheless want water provisions. Even after I take a look at the pandemic interval of 2020-2022, income didn’t materially fall. This is sensible, because the companies supplied are key, whatever the economic system.

The dividend funds are additionally interesting. If the inventory market does fall through the recession, with the ability to decide up earnings within the course of may also help to offset losses elsewhere.

Nonetheless, one concern is the fines over the previous yr on account of sewage spills. The monetary and reputational harm this may do is one thing the corporate must give attention to.

I imagine each shares may very well be good for an investor to contemplate, if they’re nervous concerning the present state of the UK economic system.