Is the UK heading for a double-dip recession?

boxcarrier

With respect to a possible further resession, as a shipping container carrier I must tell you that the container ports are at this time very busy, also (at the port of Southampton) the car export/import areas are filling up. This can only mean greater comercial activity overall.

rag31

I haven't got a clue, so a total guess. (pretty much like everyone else in the world then)

matyid

We have already avoided the supposed dreaded 'double dip' recession, something which only really Gordon Brown was fearful of - mainly down to the close relationship between Economics and Politics, and double dip would of cost him his job.

Recession is defined as 2 or more consecutive quarterly periods of negative growth. We had 2, then a period of almost no growth, but growth none the less - thus ending the recession.

The way to continue escape from recession is to up the level of investment and increase demand in the economy - sadly the budgetary position facing the new government means they are severly limited with the level of investment they can make. So in my opinion, the best we can hope for is minimal growth again.

Paul_Herring

Recession is defined as 2 or more consecutive quarterly periods of negative growth.

For those with their heads in the clouds that is the financial industry, may be.

We had 2, then a period of almost no growth, but growth none the less - thus ending the recession.

Hmm - with %ages well within the bounds of error. Nope - not seeing it myself.

Here in the real world however, we're still in recession - we haven't left the last one yet; hence no risk of a double-dip, yet.

Once the rest of us start seeing pay rises above inflation, instead of pay freezes or pay reductions, then we might consider the recession over.

matyid

That is the worldwide accepted definition of recession. I'm afraid your example of people not seeing the recession as over is incorrect, you cannot say the recession is not over because people are not seeing pay rises in line with inflation, or pay stability being outrun by unflation, thus an erosion of real money incomes. This has almost nothing to do with economic growth. They are 2 seperate policy objectives of the government. The fact is we are out of recession now.

Paul_Herring

matyid wrote: »

That is the worldwide accepted definition of recession.

Funny guy.

http://www.nber.org/cycles.html

The NBER[1] does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Hardly a 'worldwide accepted definition.'

So now we have at least two definitions, are there not 3? 4? Why is my definition any less credible/valid?

[1] National Bureau of Economic Research - "American private nonprofit research organization dedicated to studying the science and empirics of economics, especially the American economy. "

matyid

however, sorry I am quite tired, we do still face the danger of 'double dip', what I initially meant to say was that, double dip is not necassarily a fatal effect. It was only a major issue as the economics turmoil was running parallel to a general election. As previously stated politics and economics are tightly related and economics performance can often be blamed on politicians.

Eg. Labour pulling all possible resources together - i.e. scrappage scheme - to demonstrate some sort of growth to the electorate to remain in power. But it didnt, and now the effects must be faced up to.

I addition to this the oppostition at the time find any way possible to attack the flagging in power party. And therefore made a massive issue out of "double-dip", to heap even more pressure on Mr Brown.

matyid

When you have a degree in Economics & Politics we will talk. Of the top of my head.

Recession is a negative growth experienced in 2 consecutive periods or more of Aggregate Demand (AD) in the economy, which is expressed in terms of GDP not to be confused wit GNP. Anyway, AD is equal to;

- Consumption - household consumption
- Investment - investment by all firms owned by economics agents within that economy
- Government Spending - all investment made by goverment on ANYTHING
- Net exports - put simply Exports-Imports. Or the balance of payments in the economy.
AD is the total of all these.

Your definition acquired from an organisation that I have never heard of would define mean that after our 1st period of neagtive growth we would have been in recession. Find the UK's growth figures and correspond these with News reports, and I think you will find that the news of recession broke after 2 consecutive periods or 6 months.

matyid

Oh further more Economists are divided in to 2 classes.

Neo Classical - Free market, allow the market to self correct, but in some cases it will not and market failure must be allowed to persist.

Keynisian - Government intervention is necassary to avoid failures such as inefficieny and provision of goods such as defence.

They dont agree on very much, but this is one of the few things they do, because it is a basic principle of economics that has been establish for nigh on 100 years. There is no debate about it

matyid

Sorry for the excessive posts. But why do you think they feel the need to declare what their definition is of recession is? If this was the case, government would say;
"Technically we are in recession, but using our brilliant new definition we are all good!"
But we dont, we have one accepted definition which enables all economies to be compared.

See what I mean? Its a constant that has to remain for the social science that is economics to remain.