Money
Paul Lewis on the web
Don't worry: the R word will be followed by the R word
The British Chambers of Commerce predicts this week that the UK is headed for a recession. That happens when the economy shrinks for two consecutive quarters
In other words, as a country we produce less in those two quarters than we did in the two previous quarters. But economists do not call it 'shrinking'. They prefer 'negative growth'. Or as they would say on Star Trek: "It's growth Jim but not as we know it."
Many journalists twist the language as well using the old gag of calling it 'the R word' as if they were hiding an obscenity. But we are not in recession yet. The latest figures show that the economy grew by 0.2 per cent in the second quarter of the year and 0.3 per cent in the first quarter. Over the past 12 months it has grown by 1.7 per cent, which is positive rather than negative growth. However, the BCC believes that growth will be 'negative or zero' when figures are released for the next two or three quarters during the autumn and winter.
If that happens, it will reflect what most of us are already feeling. Inflation is rising, wages are not keeping up, unemployment is growing, the value of our homes is falling, and borrowing is getting more expensive. So we feel less secure financially.
It was the second quarter of 1992 when the economy last shrank. Since then, we have had a record 64 quarters of unbroken growth. The last recession began in the final quarter of 1990 and went on for a year. Before that they cropped up roughly once a decade. The previous one began in the second quarter of 1980 and again lasted a year. The recession at the end of 1973 was briefer, lasting just six months. And in 1961 we had the shortest possible – just two quarters of negative growth. Ditto 1956. And before that? Well, the figures peter out like the memories of even those of us born in the first half of the 20th century.
Of course if we do get two quarters of negative growth in the next few months journalists will leap on the numbers to show that the country is going to hell in a handcart. But we have weathered recessions before and we will again. Like a cold, they make you feel wretched. But they are always followed by the R word – recovery. As this one will be.
* Paul Lewis is the editor of Saga Magazine's Money News section and the presenter of BBC Radio 4's Moneybox. Paul's opinions are his own and for general information only. Always seek independent financial advice.
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