For Gen Z the word ‘Recession’ probably occupies some hazy recess of your memory; casting back to 2008 you probably remember this word entering conversations often between parents, on the television and plastered across newspaper headlines. But what exactly constitutes a recession? And how might the 2020 recession affect us in the UK?
Under usual circumstances, the economy of a country should be growing, with the value of goods and services (Gross Domestic Product) increasing; a recession is the term for when the value of GDP falls for two consecutive quarters (a three month period). If this carries on for a longer period or there is a particularly bad drop in value, a recession becomes what is known as a depression.
Typically a recession is linked to rising levels of unemployment, less promotions and pay rises, and lower spending on benefits and public services.
The UK has been pushed into a recession for the first time since 2009 which can be clearly attributed to the affect of the coronavirus lockdown. However, despite the palpable wringing of hands going on behind the doors of №10, there’s no need to panic just yet. Predictions from the Bank of England suggest the UK economy will see an upturn in the current third quarter of the year and, since recovery began in May, by official definition the recession is potentially already over. It is also good to remember that while a recession obviously has a negative impact on the general population through loss of jobs and so on, it can offer an opportunity to remodel parts of our country’s economic structure and install defences against the next inevitable disruption.
I’m not suggesting we can all hold hands and skip into the sunset just yet, there’s still a long way to go and it won’t always be easy — previous economic slumps such as those during 2008 and the early 80’s have shown us this; however, they have also shown us that we can adapt and instigate previously unconsidered structural changes. We are still occupying a liminal state and a lot remains to be seen; for example, whether trends like working from home will continue, something that could potentially overhaul our current commuter culture and lead to a net-zero carbon Britain.
We may not be out of the woods yet, but we can just about see through the branches.
Office for National Statistics: https://www.ons.gov.uk/