Triple-dip recession: Does it matter?
Economists, politicians and journalists are more interested than usual in the latest economic statistics to be released on Thursday morning. If they show the economy is shrinking, the UK will be considered to be in a triple-dip recession - an unprecedented event.
A recession is defined as two or more successive quarters where GDP, the total amount of goods and services the country produces, shrinks.
Since 2007, the UK economy has been in recession twice, during 2008-09 and 2010-11.
In the last quarter of 2012, the UK economy shrank again. All eyes are therefore on the first quarter of 2013. If the Office for National Statistics says the economy shrank again between January and March, the UK will have entered a so-called triple-dip recession.
The question is does this matter?
Clearly politically, it could matter a great deal. A third recession in such a relatively short time period would be unprecedented in modern British history. It would intensify pressure on the chancellor to change economic direction and intensify criticism from all sides over the government's handling of the economy.
The economic reality is less clear-cut.
Clearly any shrinkage has to be a source of concern. This long after a typical recession, the economy would normally be expected to be growing strongly and the UK would be virtually the only country in the developed world to have emerged from recession twice, only to re-enter the danger zone a third time.
After the downgrade from two major credit ratings agencies, it certainly would inspire little confidence that the UK is managing to emerge from its economic difficulties.
However, it is not clear that the phrase triple dip is an especially helpful one. For a start, it might imply that the three dips are broadly as severe as each other, like a roller coaster.
In fact, if the UK economy was a roller coaster, it would be the first dip that would attract the punters, everything else would seem rather tame.
The truly catastrophic economic period was the first recession, from the second quarter of 2008 to early 2009.
In this period the UK economy shrank for five consecutive quarters, the longest period since records began in 1955.
Or, to put it another way, the economy shrank by 6.4%. This was longer and deeper than almost any of the UK's competitor economies and worse than any period in modern British economic history.
From late 2009 the UK entered a modest recovery before again falling into contraction at the end of 2010. However, given the economy shrank for just one quarter, this did not count as a recession.
Since then the economy has spluttered, experiencing neither much growth nor that much shrinkage.
By contrast with the 6.4% contraction in 2008-09, the recession of 2011-12 saw contraction of a little over 1%.
When the economy shrank again in the last quarter of 2012, it was by 0.3% and if there is a further contraction on Thursday then that will, in all likelihood, by relatively small.
Indeed, any triple dip might even be erased by the ONS revising its figures when more data comes in over the coming months. The fact that a 0.1% contraction could be revised upwards to no change, thus eliminating the dip entirely, says much about its real size or impact in economic terms.
So, rather than a triple dip, it would be more accurate to talk about a great recession from which the economy has never recovered. Indeed, the economy is still around 3% smaller as a result.
Since the end of 2009 then, the UK has essentially been bumping along the bottom.
Little recovery anywhere
This stagnation - things not much improving, getting not much worse - is repeated across a tranche of economic indicators.
In unemployment, we are living with the legacy of that first great recession of 2008-09. Unemployment climbed rapidly in that period, with little substantial change since.
Overall business investment tells a similar story (albeit with a slightly greater upturn in the last 18 months).
Indeed, firms are hoarding capital instead of investing, by as much as £70bn a month. Consumer confidence too is nowhere near its pre-2008 level.
So the pattern is clear. The initial 2008-09 recession was so large, so overwhelming, that the economy still lives in its shadow.
Ever since, growth, unemployment, investment and confidence have recovered modestly but stabilised at far below their pre-crisis levels.
It is in that context that any triple dip should be seen.