How do we know when Britain is officially in recession

asked Riley

A. In the UK, the accepted definition of a recession is 'two successive quarters of quarter-on-quarter negative growth in Gross Domestic Product (GDP).' In layman's terms, this translates as six consecutive months of falling output.

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Q. Who determines when we have reached this stage
A. Unlike the USA, where the National Bureau for Economic Research makes official pronouncements on the state of the national economy, Britain doesn't have any one organisation that decides when the country is on the economic slide. Figures issued quarterly by the Office for National Statistics, however, are the markers by which the state of the nation's financial health are assessed.

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Q. Will the�economic slow-down in the USA mean a full-scale recession for Britain
A. Not necessarily, although commentators are divided as to what extent the UK will be affected. The general consensus seems to be that, while Britain is less affected by fluctuations in the US economy than it once was with the EC now a far bigger trading partner, it would be foolish to assume that the British economy will breeze through unscathed. In fact, many go so far as to say that a downturn here is inevitable.

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Q. What signs are there of recent changes in the economy
A. The UK economy is still quite buoyant, with low inflation and low unemployment - under one million for the first time in twenty-five years - and GDP is predicted to grow by 2% in 2001. The number of companies going bust this year, however, is noticeably higher than in 2000.

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Other factors that are likely to put things on hold and breed caution are the forthcoming general election and the long-term impact of the Foot and Mouth crisis on the rural economy in particular and tourism in general.

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Q. When was the last recession
A. There have been three major recessions in the last thirty years: the first was in the wake of the oil crisis in 1973; then again in the early years of Margaret Thatcher's government,, between 1980 and 1981; and, most recently, in the early 1990s.

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By Simon Smith