Just how bad? Com­par­ing the most re­cent re­ces­sions

The Daily Telegraph - Business - - Coronaviru­s: Focus On The Economy -


In the third quar­ter of 1979, the UK economy con­tracted 2.4pc be­fore re­bound­ing by 1pc in the next, then contractin­g for the next five suc­ces­sive quar­ters. Thus the re­ces­sion of­fi­cially be­gan in the first quar­ter of 1980 but on a peakto-trough ba­sis, it started in the third quar­ter of 1979. Ac­cord­ing to the Na­tion­wide house price index, av­er­age house prices rose 12.3pc be­tween the sec­ond quar­ter of 1979 and the sec­ond quar­ter of 1982, although in real terms they fell by 17pc. Unem­ploy­ment soared from 5.3pc (1.4m) in April-June 1979 to 11.9pc (3.3m) in March-May 1984. Manufactur­ing ca­pac­ity fell by a fifth.

1990-92 The peak-totrough fall in out­put was rel­a­tively mod­est. While sev­eral ma­jor economies showed quar­terly de­trac­tion in 1989, UK GDP only fell 2.5pc be­tween the sec­ond quar­ter of 1990 and the sec­ond quar­ter of 1992. This was fol­lowed by a record run of 15 years of eco­nomic growth. The worst-hit part of the economy was the hous­ing mar­ket, as peo­ple could not af­ford record mort­gage in­ter­est pay­ments. There were strong falls in both nom­i­nal and real house prices: Na­tion­wide’s mea­sure had them down 20.2pc in nom­i­nal terms (33.2pc in real terms) from the third quar­ter of 1989 to the first quar­ter of 1993. Unem­ploy­ment rose from 6.9pc (2m) in AprilJune 1990 to 10.7pc (3m) in De­cem­berFe­bru­ary 1993.

2008-9 Be­tween the first quar­ter of 2008 and the third quar­ter of 2009, GDP con­tracted for six con­sec­u­tive quar­ters as out­put fell 6.4pc from peak to trough. Na­tion­wide recorded an 18.7pc drop in house prices be­tween the third quar­ter of 2007 and the first quar­ter of 2009, a 20.2pc fall in real terms due to rel­a­tively low in­fla­tion. Unem­ploy­ment sta­bilised sooner, grow­ing from 5.2pc (1.6m) in Jan­uary-March 2008 to 8pc (2.5m) in Jan­uary-March 2010.

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