Is it time to start talking about a depression?

The Jarrow march that saw saw 200 unemployed men walk from Jarrow, Tyne and Wear, to London in 1936 There is no definition of what makes a depression

We now know that the UK economy contracted by 0.3% at the end of last year. This followed Olympics-flattered figures in the previous three months, when there was a bit of growth.

It continues the pattern of recent years, and every time there are two quarters of contraction in a row, we get excited about a recession, and then when there is growth again we get excited about the recovery.

Yet the UK economy is still considerably smaller than it was when the crisis started in 2008.

The influential National Institute for Economic and Social Research says we have been in a depression since then, and will not emerge until the economy reaches its 2008 level.

'Sideways slide'

And yet the word depression has rarely been mentioned and some economists have gone to great lengths to avoid using it.

"I've been trying to use a different word," says Randall Kroszener, professor of economics at University of Chicago, who used to sit on the committee that sets US interest rates.

"I came up with the term 'sideways slide', which characterises where lots of economies are - not boom and bust, just sliding along, surviving."

Randall Kroszener, professor of economics at University of Chicago Randall Kroszener prefers to use the phrase "sideways slide" rather than depression

Prof Kroszener says the key difference between a long recession and a depression is whether there are falling prices, or deflation.

The trouble is, while the definition of a recession as two consecutive quarters of negative growth is widely accepted, there is no popular definition of a depression, which means there is nowhere to go once recessions stop being relevant.

"The economy is either in high growth or in low growth, and we're on low growth," says Andrew Scott, professor of economics at London Business School.

"We're on a low trend so who cares about whether we're in recession or not?"

'Less pessimism'

David Sproul, chief executive of Deloitte UK, says he is seeing the mood improving among his client businesses.

"We're seeing much less pessimism around, but not yet optimism," he says.

"We're in an environment of uncertainty, which is very sentiment driven."

But he adds that many businesses are still concentrating on cost control to grow profits, which suggests a lack of confidence.

So although some may be talking about the possibility of the economy going into a triple-dip recession, that will ignore the fact that the economy has been basically flat for about two-and-a-half years.

The answer may not be to call it a depression, but something is needed to get the narrative beyond the obsession with tiny bits of growth or contraction every three months.

The experts quoted in this article were all attending the World Economic Forum in Davos, Switzerland.


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  • rate this

    Comment number 84.

    What does the government expect when wages are so low, the costs of public transport to get to/from work the highest in the world, the costs of rents going through the roof, cost of living rises which bare no relation to "official" inflation rates.
    Interest rates so low keep housing high and people's savings earning very little so less money "earned".
    There might be jobs but mostly very low wages

  • Comment number 83.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 82.

    48.Colin Bartlett
    "I thought it was about 'clinical depression' as apposed to 'The Great Depression'"
    Needless to say, with my bad eyes I read that as "cynical depression". Perhaps I am unintentionally nearer the mark than you!

  • rate this

    Comment number 81.

    54.Eddy from Waring
    Not sure if this is what you mean, but in the 70's /80's I had a feeling that if things went really bad, I could still rely on myself, take control of my destiny, start from scratch and build something up. Somehow I doubt in this world of global monopoly an individual still has the strongest safety net of all: yourself.

  • rate this

    Comment number 80.

    I blame global warming.

  • rate this

    Comment number 79.

    Does it really make that much difference to your average person whether the economy goes up by 0.1% or down by 0.1% in a given quarter?

    No doubt the politicians will make mileage of it either way, to make the figures support their particular message. Unfortunately however, the complex range of factors influencing economic performance are usually overlooked in favour of a trite soundbite.

  • rate this

    Comment number 78.

    For the life of me, I can't see why a depression, or the fear of one, should be anything other than the natural result of an economic cycle sparked by poor bank regulation by the FSA and Bank of England, and a Labour government that washed its hands of both for 10 years.

    Businesses must adjust for changing markets, and only the sound ones survive. It's those that emerge stronger and better.

  • rate this

    Comment number 77.

    The problem no one wants to face is that the massive economic divide is caused by corporate extraction of wealth from local economies, and we are doing NOTHING to fix this! A chain sucks money out of a community, puts back s small % in pay for those employees, the rest is out of that community. We need LOCAL ECONOMY back to survive otherwise this is going to worsen to catastrophic degrees!

  • rate this

    Comment number 76.

    Yes it is, but only if we tackle the problem of society itself. Depression, stress, anxiety are direct consequences of the money obsessed slavery of modern society.

    We only deal with these issues independently, and for a good reason - if we can do so, we can continue the current mess of a western philosphy of 'success' and 'happiness' rather than waking up to the true nature of our own race.

  • rate this

    Comment number 75.

    Is it time to talk about depression?

    Hmmm... The people of Banda Aceh are quite upbeat... they don't sit around talking about ''depression'' on a state of the art PC /tablet.

    Go for a walk down the pub, why dont you!

  • rate this

    Comment number 74.

    Re post 63.
    one of the characteristics of depression is that real wages fall more than real prices so Depression it it. The fact that people point to a booming stock market as evidence of prosperity and rising prices are distortions caused by the massive printing of money. you only have to see how far your income goes now compared with 10 years ago to see we are in a depression.

  • rate this

    Comment number 73.

    We now need strong government action such as kicking the banks hard over bonus culture and lack of regulation. A few high profile sackings would set an example to others. A serious clampdown on tax evasion in such havens as the Channel Islands, IOM etc. Fine the evaders hard AND name and shame.
    Only then will the Britsh people have any faith in this weak government.

  • rate this

    Comment number 72.


    I feel this may well be the best solution.

  • rate this

    Comment number 71.

    Maybe if the tax dodging Starbucks , Amazon , Google etc paid their fair share of tax and the Energy Companies were less greed driven, there would be more money in the UK economy to go round.

  • Comment number 70.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 69.

    Why is the FTSE hitting 5 year highs,and most other world markets are very Bullish,employment is rising,unemployment is falling.
    Does not feel like a depression to me.

  • rate this

    Comment number 68.

    Maybe it's time for journalists and politicians to stop talking crisis, crisis, crisis all the time

    Thats probably true given most the economic evidence suggests that the economy would be in a better state if they simply ignored " the crisis" rather than actually trying to fix it

  • rate this

    Comment number 67.


    '....the economy was growing out of the financial crisis before the election....'

    In the same sense it was 'growing' from 2001 - 2007. ie On a pyramid of borrowed money being laundered through public sector pay packets.

  • rate this

    Comment number 66.


    43.1L19 - "Capitalism does not work, end of."

    "Is capitalism perfect? No. Do any of the alternative works better? Nope.

    The problem now is not with capitlism per se but the Friedman/Chicago School Neo-Liberal economics...."

    I suspect you agree with each other, just use different terms.

  • rate this

    Comment number 65.

    59.Toxic Tel - "......Clegg who is taking his party into the wilderness because he will not pull the plug from underneath them."

    Because Clegg & his arch ally Danny Alexander are both Neo-Liberal economists.....

    ....they believe in the economic madness being visited on our economy by the Govt.....

    ....the economy was growing out of the financial crisis before the election....


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