A number of commentators have pointed out that this is the slowest recovery from recession in more than a hundred year. Taking output measures this is correct. But taking employment as the main measure of recession it is not.
Both the 1980s and the 1990s saw much sharper job losses, while the 1970s recession saw a similar but slightly less sharp loss, as the Chart shows.
What does this mean? Partly it explains why the current downturn has not produced the angst that the last two have. But it also raises more questions than it answers. If the output figures are true, then productivity has dropped massively as there is much less output but only somewhat fewer jobs. Can this productivity be clawed back? Or perhaps the output figures themselves have become less meaningful and the output gains and losses are less easily measurable than they used to be.
If the people are still largely in work, then an expansion of demand can soon be translated into output. If productivity has been permanently hit, then there is less capacity and it will be harder to expand. My instinct is that the output is there for the taking, once confidence returns and demand with it.
Is this an argument for more borrowing, to create that extra demand? Not necessarily as there is no guarantee it creates the wherewithal to pay back that borrowing later. This is the crux which too many people forget
by Bridget Rosewell, Senior Partner