“It is entirely spin, entirely semantics.”

As the UK joins Ireland in an official recession via the Guardian’s politics blog comes this fascinating snippet of information about that ‘official’ definition from Peter Jay, former UK ambassador in Washington, former BBC Economics editor, and current non-executive director at the Bank of England’s Court of Directors. Paul Waugh was, fortunately, listening to the Radio 4 interview.

“Art had the neat idea that if we had a definition of recession which meant that people could say we are not actually in a recession, not technically, that would get the president out of a difficulty. So on the back of an envelope he invented the idea that in order to call it a recession you had to have had two consecutive quarters of negative growth.”

“This was completely arbitrary. It was just a neat device by a clever economist trying to help his chief who was faced with a political challenge. It is entirely spin, entirely semantics. The whole argument about “Are we or are we not in recession?” is completely barmy. The rest of the world, as in so many things – often for good reasons – followed the United States.”

, , , , , ,

  • mnob

    and there in a nutshell is the problem with this ‘evidence based’ government. just as the technical adjustment of interest rates based on RPI was too simplistic to avoid boom and bust, the problems with the measures are that they use statistics which can be interpreted in any way and (probably worse) lag what empowered professionals would already know.

  • percy

    when does a recession become a depression?

  • Ulster McNulty

    percy

    “when does a recession become a depression”

    When the Germans swing heavily to the right.

  • when does a recession become a depression?

    It’s a recession when other people lose their jobs, but it’s a depression when you lose yours!

  • percy

    some great one-liners
    a recession is when you start losing your hair ( recedes)
    a depression is when you wake up totally bald 😉