Recession over… this time for good?

It’s official: Britain is out of recession. After being plagued by 5 per cent inflation, sluggish recovery and at its crescendo – the double-dip recession – the United Kingdom has returned from the wilderness.

At one time it seemed the British economy could disappoint no further. Growth rates were lower than those of several Eurozone trading partners. The IMC had lowered its annual growth forecast to 1.1 per cent. Au contraire: figures reveal that the economy grew by the equivalent in the space of three months. Yet Miliband and Balls have not admitted defeat. Far from gloating, Cameron said that the economy, which has expanded by its largest amount in five years, was ‘on track’. The reaction of Labour leaders was to be expected; Cameron playing down this triumph was not.

Scrutiny of the figures may suggest his reasons. Much of the growth
has been attributed to the Olympics and Jubilee celebrations, which boosted domestic consumption.
The picture is not merry all over however. Construction contracted by 2.5 per cent. Perhaps these latter figures represent better the economy, and this one per cent return to vitality is owed to tourists, long departed.

Labour has accused Cameron of breaking Whitehall regulation by hinting at the figures in advance. The politico-economic situation may be under threat from more than poor sportsmanship. Economists have even speculated a possible triple-dip recession.

Nevertheless, in spite of 2 per cent inflation, an interminable Euro crisis, and 4 per cent of GDP to be recovered, Britain is growing. The mere symbolism is likely to re-install confidence and could create a virtuous circle in the form of a multiplier effect. Greater confidence leads to more spending; more spending promotes higher investment; higher investment leads to greater production – and economic growth.

Cameron knows the deep structural problems in the economy too well to cheer. Journalists must say it for him. Now that the second recession is over, perhaps proper recovery can finally begin.