British life-style: Keep smiling, we are in recession

Pic.: The Spectator

It was extremely optimistic to think the UK could revise its way out of recession. After the Office for National Statistics (ONS) reported GDP figures for Q4 last year showing a 0.3 per cent economic contraction between October and December, a recession seemed set in stone. Today the ONS reports no revisions to the figures. But even a small revision upwards would not have been enough to shake off the label of a ‘recession’, notes ‘The Spectator’.

This remains a ‘technical recession’. Britain’s economy fell – just – on the wrong side of the line last year.

After today’s update, ministers remain in the same position today as they were yesterday: burdened with the badge of recession, quietly optimistic that the picture will soon improve.

In the meantime, the government must keep selling the idea that economic conditions are improving – a task made even more difficult when the most recent data tells a different story. The Prime Minister is counting on data over the next few months to show that his ‘bounce back’ year is really underway. But proof that recession is in the past is unlikely to be enough to convince the public that they are really ‘better off’.

As a British Social Attitudes survey revealed, there is widespread disappointment with the level of access the public has to the social services they pay for: in this case, the National Health Service. The NHS has a record-low approval rating, as people struggle to get GP and hospital appointments. But stagnant growth is taking its toll, too. While the size of the economy took a hit in the second half of last year, GDP per capita has been in decline for much longer. Workers, on average, are estimated to have less disposable income this year than they did back in 2019.

In this sense, the economic recession the UK finds itself in is being understated as much as it is being overstated. While the UK economy has experienced the smallest of contractions, the economic damage that has been done to households from the pandemic and subsequent economic shocks has never really been mended. Stagnant growth combined with an inflation crisis has led to a notable fall in living standards. This is the real trouble for government: shedding the technical definition of recession is not going to be a magical moment, marked by a booming recovery. If anything, it’s more likely to reveal that the UK’s economic problems are far bigger than this ‘recession’ label suggests.

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