No double dip, but we’re further away from recovery than we thought
Authors: Gareth Quested
27 June 2013
On the second day of the government’s roll-out of the Spending Round, the ONS appears to have given them a timely boost with news that we did not, as previously thought, experience a double dip recession. However, the new statistics from the ONS are no cause for celebration, as they also reveal that we experienced an even more severe recession, and are further away from recovery than we thought.
The revisions to the first quarter of 2012 now mean that, according to the widespread definition of a recession being two consecutive quarters of negative growth, there was no double dip recession. But it still shows the economy ended 2012 the same size it started. With the ONS performing its annual update of economic national accounts for its Blue Book, the size of the recession has been increased from a peak to trough fall of 6.3% to 7.2%, with GDP in 2009 now reported to have been 5.2% less than 2008, previously estimated at 4%.
As well as having fallen further than thought, the ONS now reports that we’ve grown a cumulative 3.5% since the trough, compared to a previous estimate of 3.9%. Combined, this means that, five years on from the start of recession, we are less than half way to recovering lost output – we have only recovered 46% compared to a previous estimate of 59% (see graph). That we are still 3.9% (previously 2.6%!) below our pre-recession peak five years on is even more striking when we take in to account that our population grows at an average of 0.7% each year*.
All this highlights the importance of action now to unlock growth and innovation. Whilst there has been a lot to welcome in the Spending Round (as my colleague Charles blogged here), much of this is focused on the next parliament. The government seems to have little in the way of a growth plan for now.
* figure for England and Wales
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