The figures have just come out, and – to the surprise of anonymous City analysts, but not to me, or the OECD, we’re in an official douple dip recession. The economy has shrunk for two quarters in a row. Where the City was expecting around 0.1 per cent of growth, we’ve in fact got 0.2 per cent of shrinkage (I’m listening out for the first mention of “negative growth”).
This is pretty terrible news for the Government. Economists may think that the definition of a recession is pretty irrelevant, but presentationally it matters. Most people don’t follow the quarterly GDP figures, but they know that the economy is in a bad way. When all the broadcasters today and newspapers tomorrow run “double dip recession” headlines, that general sense of gloom will become one of panic. The irony is that this could then become self-fulfilling, as consumers begin cutting back whatever spending they were doing, thereby making the situation worse.