The prospects for growth in the UK over coming year and beyond are becoming clear. The final revisions to Q4 data for the US and UK tell a story that both these economies grew more rapidly in the Christmas quarter than had been thought at first. It is likely that we are out of recession but still in a depressed state when you look at activity levels compared with three years ago. Opinion is somewhat divided over the pace of recovery in 2010 – indeed whether we will slip back into recession in the West if a perfect storm of poor policy plus lack of confidence in ‘the markets’ and in the real economy fails to ignite growth.
We can learn a lot about the potential unfolding of this recession by reflecting on our previous experiences. The National Institute of Social and Economic Research (NIESR) produces a time-line for the UK recession compared with the four main recessions experienced in recent times: in 1930-34, 1973-76, 1979-83 and 1990-93. If you look at the progress of the recession in months since the peak of the cycle and the level of activity in relation to that peak, you see some very clear patterns.
