Bad News Mounts Over The Official Recession
Posted by Allison on 1 April 2009, 16:34
It's true – in case you hadn't heard, what we all expected and knew would happen is finally official. Great Britain is really in a recession, not that this will come as a great surprise to many people.
But of course the knowledge that this is the case and the actual reality of it are two very different things. For example, one of the biggest effects that this news has had is the increased weakness of the pound. It wasn't doing well anyway and more news over the depth of the recession has not helped in stabilising it in any way.
The early days of February in particular have been troubling for the pound. Was it just coincidence that several people were saying how bad this recession could be? We all knew that it wasn't going to be an easy ride, but it seems that while many of us remember the recession in the 1990s, we need to go a lot further back to find out how bad it will really be.
Much of this is speculation, but the Children's Secretary Ed Balls declared that you would have to look back over a century in history to find anything worse. That is a huge statement, and there is no doubt that the strength (or lack of) of the pound wasn't helped one bit by what he said.
That doesn't mean he wasn't telling the truth though. His comments certainly didn't go unnoticed by the media at large. There are plenty of news stories and web pages which cover his comments and what various other people (including the Prime Minister) thought of them. You can read one such news story here, on the Telegraph website.
Perhaps the most alarming thing about this statement is that to go back that far, you'd need to disregard the depression of the 1930s. At the moment we are all checking our currency converter to see whether we can afford a holiday to the country of our choice. But if things get much worse holidays are set to become almost a thing of the past. Certainly for a time, anyway.
Of course there are two main camps whenever any sweeping statement like this is made. One camp disregards the possibility that the recession could be this bad, and instead tries to focus on positive things. Or in this case, they at least downplay the situation and some may be sticking their heads in the sand.
The other camp starts worrying about how bad it will really get. But worry doesn't really get us anywhere at all. The pound will not fight back against those poor exchange rates if we are all worrying. If anything, the situation is likely to be made even worse.
Not everyone will have agreed with Ed Balls statement. But whether you do or not, there is no questioning the effect it will have – and has had – on many other people. It is rather like a pebble being dropped into a pool. The ripples will continue to affect the surrounding water long after the pebble itself has been released.
In this case, it seems as if the pebble has been a very large one, and we can therefore expect to feel the ripples for a long time to come.