TRIPLE DIP RECESSION

Triple Dip Recession



Triple Dip Recession

Triple-Dip Recession

A recession is defined by two consecutive quarters of falling GDP. Britain suffered a "double dip" recession when, after a brief period of growth, it slipped back into recession in the last three months of 2011. The country only emerged from the slump in the third quarter of 2012, after a boost from the London Olympics helped pull up GDP by 0.9 per cent. If this latest slide is followed by another quarterly slump, Britain will dip into negative growth for the third time - suffering a triple-dip recession (Western Mail, 2013, p. 9).

Background

What has been different about the recession beginning in 2008 is that the cyclical pattern has not emerged. Each period of recession has been followed by a short period of growth - but certainly no boom - and then further recession. This has brought about the coining of new terms and the redefinition of others. Traditionally, a double-dip recession has been understood as a recession followed by a short period of growth, followed by a further recession. The experience since 2008 of a period of recession followed by several quarters of slightly positive growth, and then a further recession does not quite fit this definition. This looks to all intents like a double-dip recession, so the definition has evolved to suit (Khaleej Times, 2013, p. 14).

If the Chancellor's policies do not achieve the desired effect, the UK is in danger of entering a third period of recession since 2008. This scenario has been given the name of the “triple-dip” recession and would be a unique occurrence. There is no guarantee that significant growth will follow a third recession, so terminology may need to evolve to add a “quadruple-dip” and even a “quintuple-dip”. Whether such a classification has any value to the economic analyst is doubtful. Indeed, the highly respected National Bureau of Economic Research chooses to take a more over-arching perspective on economic activity in its definition of a recession and looks for “a significant decline in economic activity spread across the economy, lasting more than a few months” (Daily Record, 2013, p. 4).

There are broader issues facing the UK economy beyond its failure to return to sustained growth. The difficulties faced by the Euro zone have received widespread media attention. This is justified; smaller EU economies such as Greece can be bailed out by the stronger members but the larger economies cannot. If the position of Italy or Spain becomes untenable then the current structure of the single currency will be seriously threatened (Western Mail, 2013, p.10). Any such disruption to major trading partners of the UK will make the return to growth more difficult. The combination of a high public debt, weak growth, and the potential for serious economic difficulties in the EU is a dangerous combination for the UK. We have so far avoided the economic catastrophe that has often been predicted but it is not yet an entirely remote ...