Talk of a possible recession has been going on for nearly as long as the coronavirus lockdown has been, with Chancellor Rishi Sunak warning that the economy will likely not be able to simply ‘bounce back’ from the strain that Covid-19 has put it under.
He said late last month: ‘It is not obvious that there will be an immediate bounce back,’ adding: ‘We are likely to face a severe recession the likes of which we have never seen.’
The week before that, Mr Sunak told the BBC: ‘It is now very likely that the UK economy will face a significant recession this year and we are in the middle of that as we speak.’
Meanwhile, the Bank of England warned that the pandemic could result in the UK suffering its deepest depression in over 300 years.
With these worrying forecasts coming thick and fast, here’s a reminder of the technical definition of ‘recession’ and the impact one can have on a country.
What is a recession? The word ‘recession’ refers to a decline in economic activity which can see levels of unemployment rise.
While there is some debate in the economic field as to what exactly constitutes a recession, the largely accepted definition is that a recession is when gross domestic product (GDP) has contracted for at least two quarters – aka six months.
Basically, the amount of goods and services made in the UK would need to decline for that amount of time, but there’s no limit to how long a recession can go on for.