Brace yourselves for another round of money printing
In late 2009, the UK crawled out of recession – defined as at least two successive quarters in which the economy is contracting.
By Liam Halligan
06 Oct 2012
Last October, though, we fell back into recession again. Official GDP numbers confirm that, since then, the British economy kept shrinking at least until June this year. So this country has endured not only the first “double-dip” recession since the 1970s, but also the longest on record.
An issue of very considerable economic and political significance is whether or not the UK has continued to contract between July and September, or whether the recession is now over. The answer is obviously hugely important in terms of the fate of thousands of British companies and millions of British livelihoods. What’s also at stake, though, is the economic policy-making trajectory of the UK and, by extension, much of the Western world.
A double-dip recession, with the second leg lasting a year or more, may be too much for the increasingly fragile Coalition to withstand. If the recession has indeed continued into the third quarter, then the Chancellor will come under enormous pressure to alter course. The Government’s commitment to “austerity” could falter, a development that would significantly undermine the resolve of governments elsewhere to borrow and spend less.