Let’s get the provisos out of the way first.
The fact that the UK is technically in recession changes nothing fundamentally.
The economy had been performing weakly for some time. Gross domestic product – the broadest measure of how much income we are all generating across the country – had been essentially flatlining since early 2022.
Defining a recession
The definition of a recession is somewhat arbitrary anyway.
For some reason no one can quite remember, economists alighted on the notion that when the economy shrinks for two successive quarters, it constitutes a technical recession.
Imagine if we had learnt today that the economy had shrunk by 0.4% in the third quarter of last year and had flatlined in the final quarter. That would not be a “technical recession” – even though it would amount to more or less the same actual dent on economic activity as the numbers actually published by the Office for National Statistics today – of a 0.1% fall in Q3 of 2023 followed by a 0.3% fall in Q4.
Indeed, while this qualifies to be called the “R word” under that definition, this would be the shallowest recession since 1956 – provided growth returns in the first quarter of this year. And that’s assuming one of these quarterly falls isn’t revised away altogether.
Which brings us to the final proviso: these GDP figures are frequently revised – and often revised upwards.
Back in 2012 many people were fretting about the possibility of a double dip or even triple dip recession. In the event, the ONS eventually revised the numbers and there was no technical recession.
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