From the TUC

In fact, this is the slowest UK ‘recovery’ ON RECORD

28 Jan 2015, by in Economics

A second look at historic GDP data shows the current ‘recovery’ is the slowest on record (which extend back to 1830), rather than the slowest recovery in modern history, as we reported yesterday. This chart shows index numbers of recoveries in GDP from the bottom of each recession to five years later. The current ‘recovery’ is in black: it falls short of all historic recoveries by a very long margin.

Recoveries from recessions from the 1830s to today


The figures are based on the Bank of England’s historic database (up to and including the recovery from 1947); ONS National Accounts are used for the rest, with data for the latest ‘recovery’ now extending to 2014 for the first time, following yesterday’s GDP release. (To keep it tidy, I have defined a recession as two consecutive annual falls in GDP.)

These figures show growth of 8.8% over the five years since 2009, the low point of the latest recession. The average growth over the five years for all other recessions was 16.1%, nearly double today’s effort. On this basis we are even underperforming the disastrous economic age that followed the First World War and the Geddes Axe spending cuts.

It is of great interest that the strongest recovery of them all was the one from 1931 (virtually 20%, four per cent a year), when the approach taken to policy was the reverse of today (and public debt was higher). Truly, this is economic self-harm.

4 Responses to In fact, this is the slowest UK ‘recovery’ ON RECORD

  1. Gareth
    Jan 28th 2015, 11:18 am

    “when the approach taken to policy was the reverse of today (and public debt was higher)”

    That is a curious statement.

    The public sector ran surpluses until very late in the 1930s, and the recovery after 1931 is widely attributed to an easing of monetary policy, i.e. leaving the gold standard. This of course a close equivalent to Osborne’s endorsement of “monetary activism” and tight fiscal policy, rather than the “reverse of today”.

    See, e.g. Nick Crafts:

  2. Geoff Tily

    Jan 28th 2015, 3:31 pm


    Thanks for this. I am familiar with Crafts’ view. I do not dispute a very significant monetary factor; in fact I have written very extensively on the importance of momentary policy in the 1930s, e.g.

    But the monetary factor was very different then, and fiscal policy came to be deployed in a big way.

    1. In the 1930s, monetary contraction over the 1920s was clearly the primary cause of prolonged economic weakness. Releasing the monetary restraint was therefore a powerful stimulant. Most consider that monetary policy was too loose in the run up to the great recession.

    2. With the termination of the gold standard, the government effectively took monetary policy out the hands of the Bank of England. A managed exchange rate regime was introduced (under the exchange equalisation account). In 1932, with the conversion of the War loan, the government also began to take direct action on the long-term rate of interest. To do so, it introduced capital control. Fundamentally: in the 1930s, the financial liberalisation / globalisation of the 1920s was reversed.

    3. There is no sign of any reversal of financial liberalisation today. Since the great recession the MPC may have held Bank rate low (but a cheap Bank rate is not a cheap rate for SMEs etc), and there is always the threat of dearer money just ahead, even now. In contrast, Keynes took whatever opportunity he had to assert that cheap money was here to stay. As it was, until 1951.

    4. By 1933, commentators and many policymakers were coming to understand that cheap money may have been necessary to resolve the depression, but it was not sufficient. From 1934 spending was expanded vigorously – I discussed this in an earlier post noting increases of spending of 10 per cent into 1935 and 13 per cent into 1936.

    5. The point of government spending was to expand the economy; the consequent revenue gains and benefit spending reductions would outweigh the original outlay. “Look after the unemployment, and the budget will look after itself”, as Keynes said. So the starting point in terms of the deficit does not matter.

  3. Howard Reed
    Jan 29th 2015, 8:37 am

    Great post, Geoff. This is aggregate UK GDP rather than GDP per capita, right? My guess is that if you did it on GDP per head the post-2009 recovery would look even worse than the others.

  4. It gets worse: Osborne’s ‘recovery’ is twice as slow as the slowest recovery on record | ToUChstone blog
    Feb 8th 2015, 7:00 am

    […] figures update the previous post on GDP recoveries onto a per head basis as suggested by Howard Reed. ONS population data extent on […]