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| When is a recession not a recession? | When is a recession not a recession? |
| (35 minutes later) | |
| When is a recession not a recession? According to the Office for National Statistics, when the economy is "broadly flat". Fresh from announcing that Britain has escaped a triple dip, the nit-picking number-crunchers are now arguing that the three quarters of declining GDP in late 2011 and early 2012 we've all come affectionately to know as the "double dip", should perhaps not qualify as a recession at all. | |
| In a new Economic Review, the ONS points out that there's no universally accepted definition of recession – in the US, for example, a panel of top academics, the National Bureau for Economic Research's business-cycle dating committee makes a judgment about when a recession has taken place, taking into account other factors such as unemployment, as well as output. | In a new Economic Review, the ONS points out that there's no universally accepted definition of recession – in the US, for example, a panel of top academics, the National Bureau for Economic Research's business-cycle dating committee makes a judgment about when a recession has taken place, taking into account other factors such as unemployment, as well as output. |
| In Britain, two consecutive quarters of declining output is the usual definition of recession. But the ONS points out that the last quarter of 2011 and the first three months of last year saw marginal declines in GDP of just 0.1%; and the subsequent 0.4% decline from April to June was exaggerated by the extra bank holiday for the Queen's jubilee. | In Britain, two consecutive quarters of declining output is the usual definition of recession. But the ONS points out that the last quarter of 2011 and the first three months of last year saw marginal declines in GDP of just 0.1%; and the subsequent 0.4% decline from April to June was exaggerated by the extra bank holiday for the Queen's jubilee. |
| "Rather than relying on small changes in quarterly growth rates to justify calling a recession, we should consider the growth rate of the economy over a longer period", the ONS argues. | "Rather than relying on small changes in quarterly growth rates to justify calling a recession, we should consider the growth rate of the economy over a longer period", the ONS argues. |
| This looks suspiciously like a pre-emptive attempt to fend off a wave of statto-bashing – a favourite sport in the City – if, as many analysts expect, the double dip is eventually revised away in a later set of statistical estimates. | This looks suspiciously like a pre-emptive attempt to fend off a wave of statto-bashing – a favourite sport in the City – if, as many analysts expect, the double dip is eventually revised away in a later set of statistical estimates. |
| But before George Osborne starts re-writing his legacy – scratching out the bit where he drove Britain back into recession – he should read the rest of the ONS's musings. Recession or no recession, they conclude, the economy is flat on its back, or as they prefer it, "broadly flat". | But before George Osborne starts re-writing his legacy – scratching out the bit where he drove Britain back into recession – he should read the rest of the ONS's musings. Recession or no recession, they conclude, the economy is flat on its back, or as they prefer it, "broadly flat". |
| Worse, in electioneering terms, as the Tories start to look towards 2015, even if the headline-grabbing double dip is wiped away, the ONS says the underlying figures show the economy moving through "three distinct phases" since 2008. | |
| There was a deep recession, lasting until mid-2009, followed by five quarters of "steady recovery"; but from the third quarter of 2010, shortly after the coalition took power, output has been "flat or at best gently rising". | |
| With a plethora of charts, the report hammers home the point that this has been a weaker recovery than any seen in the 20th century. Worse still, for politicians hoping for a return of the feelgood factor, the 3.8% rise in the population since 2010 has meant that in GDP-per-capita terms, the non-recovery looks even more non-existent. Output-per-head is 12% lower than at this stage after the onset of the painful 1970s recession. | With a plethora of charts, the report hammers home the point that this has been a weaker recovery than any seen in the 20th century. Worse still, for politicians hoping for a return of the feelgood factor, the 3.8% rise in the population since 2010 has meant that in GDP-per-capita terms, the non-recovery looks even more non-existent. Output-per-head is 12% lower than at this stage after the onset of the painful 1970s recession. |
| It may be fanciful for the ONS to hope that economists – let alone journalists – will moderate their language, and soften the long-held, hard and fast definition of "recession"; but this new analysis does suggest there's nothing standard about the trauma the British economy has experienced in the past five years – and as yet, no end in sight. | It may be fanciful for the ONS to hope that economists – let alone journalists – will moderate their language, and soften the long-held, hard and fast definition of "recession"; but this new analysis does suggest there's nothing standard about the trauma the British economy has experienced in the past five years – and as yet, no end in sight. |