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Thursday, October 25, 2012 

Just an ambulance at the bottom of a cliff.

We are, apparently, out of recessionIt has to be apparently as, depending on where you live, your job or lack of one and your other personal circumstances, it's never been clearer that the official statistics tell only the slightest of stories.  For a hell of a lot of people, there hasn't been any uplift since the crash of 2008 whatsoever: only on Tuesday the ONS released statistics on net national income per head, showing there had been a decline of 13.2% since then, almost double the drop in GDP.  In parts of London and the south east by contrast, you'd be hard pushed to see any evidence that there's been a recession at all: yes, consumers have cut back on their spending to a certain extent, but for the most part unemployment has stayed low and businesses have carried on much as they did before.

Naturally, George Osborne and David Cameron have both taken credit for this first sign of recovery and while not being too triumphalist, have cited it as evidence of their policies beginning to work.  This is in stark contrast to how they, equally naturally, took no responsibility whatsoever for the previous three quarters of negative growth.  Everything other than their interventions were blamed: banks for not lending, the Eurozone crisis, Labour, the jubilee, the weather and Labour some more.  A couple of weeks ago, the word recession did not so much as pass their lips.  Yesterday Cameron informed the Commons while being pasted by Ed Miliband as is now the pattern at PMQ's that the "good news would keep on coming"

And fair enough, growth of 1% between July and September is to be welcomed.  Once you've stripped out the 0.5% apparently accounted for by the making up of time lost for the extra jubilee bank holiday, and the 0.2% added purely by the sale of Olympic tickets, 0.3% isn't quite as impressive, but it is growth nonetheless.  Indeed, if we're being especially charitable and add that 0.5% back onto the last quarter we actually came out of recession then, albeit with a barely noticeable growth rate of 0.1%.  The figures are though prone to revision, as evidenced by the last quarter where the first announced statistics suggested a decline of 0.7%, rather than the 0.4% it turned out to be after they were twice updated.  No one's suggesting they're likely to be revised up in this instance, so it may well yet turn out that shorn of the Olympic factor, the economy remains as flat as my personality.

There's also little indication that this pattern of negative growth followed by slight recovery is going to change.  The last three months of the previous two years both saw negative growth, and betting against that happening again when prices are almost certainly going to rise would be foolish.  Even if we don't suffer an unprecedented triple dip, and that's a very real possibility if the Americans implement their planned cuts in January, our own cuts are due to accelerate over the next two years.  This is still planned in spite of the recognition from the IMF that they underestimated the effect fiscal consolidation would have on growth, and in spite of all the evidence suggesting that if the pace of consolidation was slowed in order to borrow to invest, there wouldn't be a rise in the cost of doing so.  George Osborne previously claimed, entirely wrongly, that the economy was "out of the danger zone".  Both he and Cameron could yet have to eat their words again.

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