The recession is over, according to one of the nation's most respected economic think-tanks.Well maybe. The Credit Crunch has had more than a whiff os Swine Flu and the Millenoum Bug about it from the start. No-one buys newspapers to read good news after all.
The UK's surprising resilience is confirmed by the National Institute of Economic and Social Research (NIESR), an independent body with an enviable record for accuracy. It says that the economy hit rock bottom in as early as March and returned to growth, albeit modestly, in April and May.
The institute says that the economy grew by about 0.2 per cent in April and by 0.1 per cent last month. Although hardly a return to the boom conditions that prevailed before the credit crunch, these figures mark the end of more than a year of stagnation and recession, and stand in stark contrast to the grimmest predictions of a 1930s-style slump. Ray Barrell, director of forecasting at the institute, said that "the evidence from the last few months is that we may well have reached the bottom of the depression".
The Bank of England's radical cuts in interest rates and its programme of "quantitative easing" – injecting cash directly into the economy – were singled out by the NIESR as major reasons for the turnaround. According to the institute, if the recovery is sustained then the current downturn will have been less severe than those of the 1930s and the 1980s, although still more grievous than the one the economy went through in the early 1990s.
I quoite like the idea of the recession being over, because it sucks that people are losing their jobs and their homes. On the otherhand, there's no reason to think that we won't immediately start making the same mistakes again as the economy picks up. And, bluntly, environmentally, we can't afford to start growing again. The slowing economy has slowed CO2 emmissions (2). That'll be reversed as soon as growth starts and with it, dem=mand for oil increases again.
Of course, the analysts might be wrong. The Great Depression was frequently decalred over but it carried on quite happily, the rumours of its demise greatly exaggerated. JK Galbraith relates this anecdote about the supposed end of the Depression:
... in June 1930, things were bad and getting much worse. A delegation called on President Hoover to ask for a public works relief program. He said: "Gentlemen, you have come sixty days too late. The depression is over." (3)One thing is certain - the columists who foretold The End Of The World a few weeks ago wil immediately foreget that they ever did so, and hail the Bright New Day. Apart from the ones who are trying to destroy Brown and his government, who will continue to pronounce A Winter Of Discontent ain the face of any evidence to the contrary.
1 - "Analysts: The recession has ended," by Sean O'Grady in The Independent, 11th of June, 2009. (http://www.independent.co.uk/news/business/news/analysts-the-recession-has-ended-1702147.html)
2 - "Oil Report Shows Global Carbon Emissions May Fall in 2009," by Dennis Markatos, publsihed on The Huffington Post, 10th of April, 2009. (http://www.huffingtonpost.com/dennis-markatos/oil-report-shows-global-c_b_185633.html)
3 - The Age of Uncertainty, by JK Galbraith, published by BBC/Andre Deutsch Ltd, 1977. The quote is from page 211.