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.”