A recession is defined as a period of general economic decline, typically indicated by a fall in GDP for two or more consecutive quarters. Everyone’s still feeling the effects of the recession that began back in December 2007. The latest statistics show some of the consequences we now face.
Total consumption has taken a hit since the recession. This has great relevance, as consumption is a large (if not largest) component of GDP, the leading measure of the success of an economy. This is partially due to increased unemployment – but hopefully, with the unemployment rate stabilising, consumption may begin to pick back up again in the near future.
Looking at tourism, there was a steep drop in net consumption (exports minus imports) during the recession. What this means, in part, is that UK holiday goers have been staying within the UK to relax (and pray for sunshine). Even the new Prime Minister went to Cornwall for his summer holiday — at least, before it was interrupted! For UK holiday destinations, this is good news. For example, Lincolnshire’s tourism industry recovered over the last year. As tourism is the second biggest component of the economy, this is a (rare) shard of light.
Production took a huge hit during the recession, resulting in unemployment, factory closures and bankruptcies. However, UK manufacturing is finally beginning to recover – another indicator that the recovery is in process.
This shows the severe drop in the balance of trade throughout the recession. An improved balance of trade is good news, certainly; but it’s important to remember that it’s a symptom, rather than a cause, of the recovery.
