NIESR

Recessions and recoveries: a historical perspective 

Here is NIESR's chart showing the path of recession and recovery in various previous downturns, updated for our estimate of monthly GDP, published March 12, 2013.  

Our monthly estimates of GDP suggest that output declined by 0.1 per cent in the three months ending in February, after a decline of 0.2 per cent in the three months ending in January 2013. The estimates suggest that the economy continued to stagnate in the first two months of this year and the negative output gap continues to widen.   

Over a longer perspective, this represents the slowest post-recession recovery in output in the past one hundred years; the economy was only ½ per cent larger at the end of 2012 than it was in the third quarter of 2010. Indeed, per capita GDP - the simplest measure of the UK's overall economic prosperity - actually fell over this period; we do not expect it to regain its pre-recession peak until approximately 2018. 

Looking forward, the focus should not be whether or not the economy shrank slightly at the start of 2013 to fulfil the ‘technical’ definition of recession, but on the broader question of whether stagnation persists throughout 2013.   We do expect the economy to expand this year. NIESR’s latest quarterly forecast (published 5th February 2013) projects growth of 0.7 per cent per annum this year and 1.5 per cent in 2014.  

More detail on NIESR's latest quarterly forecast for the UK economy, published February 4, is here.  What should the government do to ensure a strong and sustainable, investment-led recovery?  Some suggestions for next week's Budget are here