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Author(s) -
Dicks Geoffrey
Publication year - 1993
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1993.tb00301.x
Subject(s) - recession , economics , unemployment , trough (economics) , global recession , falling (accident) , economic recovery , keynesian economics , stock (firearms) , economic history , monetary economics , history , macroeconomics , medicine , environmental health , archaeology
The New Year has started with a burst of enthusiasm in UK asset markets. The stock market has reached an all‐time high and the pound has recovered from the sub‐1.50 and DM2.40 lows that it hit in the aftermath of its exit from the ERM last September. There are external reasons for the buoyant start to 1993, namely the exposure of UK companies to the us economy where recovery seems assured, and the desire to park short‐term funds outside the EMS where renewed turmoil greeted the start of the New Year. But over and above this, hopes have risen that the worst of the UK downturn may be over, that recession is at last ending and recovery beginning. It is this question that we examine here. We have argued before that the recession will not be over in any meaningful sense until the level of output tops the pre‐recession peak of the second quarter of 1990, output growth returns to its trend rate of 2‐2.5per cent and unemployment starts falling, But in a more limited sense we can ask whether output has stopped falling and whether a recovery in output is under way. Specifically we may ask whether, when the CSO comes to date the trough of the recession, it will be put in 1992 or whether it is still ahead of us in 1993. In answer to this last question, we find that the trough of the recession may have occurred as long ago as April 1992. If so, the initial recovery phase has been feeble to say the least ‐ there is almost no hard data yet showing a recovery in output. What is evident ‐ and it is on this that market enthusiasm is based ‐ is that (consumer) demand is rising slowly. The hope is that the increase in demand will be sustained, and that a recovery in output will follow.