Double dip recession: An accident of maths?

It is an accident of the maths. A point here or there doesn't signal disaster. It is a statistical event. However you phrase it the fact is the economy is stuck.

So beyond the political ammunition this gives the opposition to hurl at the government do the numbers actually matter?

It is an accident of the maths. A point here or there doesn't signal disaster. It is a statistical event. Credit: Reuters

In my view, yes. It has become abundantly clear in recent months that big companies have large amounts of cash to spend. But caution about where our and the whole continent's economies are heading as held them back. It is a lack of confidence about the future that in many cases has kept their purse strings tight.

As we have discussed here many times the squeeze on consumers with stubbornly high inflation and unemployment means the recovery won't come on the back of consumer spending. It won't come from public spending as the chancellor has made clear again and again, with the Treasury even this week paving the way for another five percent of cuts. But the third player in the economy, the private sector, needs confidence about where things are heading if they are to start spending that 75 billion cash pile.

It is an accident of the maths. A point here or there doesn't signal disaster. It is a statistical event. Credit: Reuters

In brass tacks, if a company small or large thinks they are going to have more customers because the economy is growing they are more likely to hire new staff and buy new kit. If they don't, they often won't. Creating a climate of confidence was already proving difficult to do. With the official numbers showing that we are actually back in recession that just became even harder.

George Osborne on a building site as discussion about whether the construction figures have too much influence Credit: Reuters

P.S. while there is an interesting and important discussion about whether the construction figures have too much influence, as @ITVRichard writes it is the retail figures today that have been surprisingly weak. But the fall in construction has dragged the overall picture down. It is particularly hard for the government to explain that away - construction reflects domestic demand, house building and public sector cuts. As the boss of Balfour Beatty, a member of the ITV News Business Club told me the is no doubt that the number of projects they get is down, and the scale of them is smaller as a result of the slowdown in spending. There are ways of using private money on infrastructure that may come through. But they are a long way from reality so far.

More on this story