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David Herdson asks: Recession – What recession?

June 30th, 2012

Why is no-one talking about the double-dip?

The revised growth figures released earlier this week showing the current recession to be deeper than previously thought passed with the sort of muted media comment that’s been was typical of the coverage of the current recession in general – you’d hardly know there is one. The media seems unable or unwilling to use it as a narrative within which to run other economic stories. Even Labour’s efforts to push the line are half-hearted and lack conviction. Why is this turning into the recession that dare not speak its name?

The first answer may be that it’s a victim of the definition of what a recession is. Rather like seasons are better defined by what’s happening in the natural world rather than dates on a calendar, so a recession is better defined by more than just growth numbers.

If the media wanted to run recession as a narrative than it would evidence it with stories about soaring unemployment, homes repossessed, many businesses going to the wall and a ballooning budget deficit – things which just aren’t happening. On those scores, things are no worse and in some cases (unemployment, for example), better than they were six months ago.

It’s also a pretty small-scale recession so far. The two quarters of decline have seen GDP fall by 0.7% – about one-tenth the scale of the 2008-09 recession[2]. It fits more readily into a picture of output being more or less flat and money being tight but with the economy neither improving much nor getting markedly worse.

    For Labour’s part, mentioning the double-dip runs the risk of reminding people who was in government during and before the first, much larger, recession.

Another factor is that the UK recession is clearly part of a much bigger story within Europe. When what is still by a long way Britain’s major trading partner goes through what the Eurozone is going through, it’s inevitably going to have an impact on exports and confidence in general. In as far as there are ongoing stories to report in the downturn, that’s where they’re to be found and as such, it’s the Eurozone crisis which provides the ongoing narrative.

The likelihood is that five bank holidays, the wettest three months for many a year, and the most intense moments of the Eurozone Crisis so far will result in Q2 producing a negative growth figure as well. Will that mean the double-dip will start to become more of a political story? Not unless it feeds through to measures that impact much more directly on people. For the time being, the numbers are only of interest to statisticians and anoraks.

David Herdson