Double Dip

Now here's a ticklish subject!

Labour and the Left in general have criticised the Coalition Government's public spending reductions this year being made this year, saying they "would lead to a double-dip recession" (or words to that effect).

Their implication at best, and outright claim at worst, was that this meant a full-blown depression or similar was on its way.

Now, by looking a little more carefully at this topic, those with some knowledge of it and of the history of similar situations have made it all much clearer. My favourite was the authoritative piece on five economic areas by Andrew Lilico from Policy Exchange, who just yesterday indicated that what I'd term a "mini-dip" is likely to occur, as has happened on most of those previous occasions, which were typically of barely one percent after the one in the 1950s, and usually under half a percent dip.

However, the one time it didn't happen was when public spending was cut. I have reproduced here the graph from the linked article, to show all of this (click on the image to display it full size).

There is certainly no indication in the current scenario of anything serious happening as a result of something similar impending, any more than on those earlier occasions. Indeed, because of the early public spending restraint, there is a fair chance that it won't happen at all. Thus the spin by Labour et al can be ignored (no change from the norm there, then!) and we can all get on with our lives as before after all...

The Speccie's Peter Hoskin has this morning conveniently listed summaries of and links to some recent articles regarding the subject of double dip predictions, including the Andrew Lilico one (which I had already thoroughly read). It's a handy reference point.