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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

7 May 2012

What is double-dip?

It may sound like an option you might see on the sweets menu, but double dip is a sobering reality in the UK economy right now.

It has recently been announced that the long-anticipated double-dip recession is here - this gives us, initially, two questions to answer:
1) What exactly is a double-dip recession
2) What impact will it have on the economy

The answers are relatively simple whilst retaining the complexity that all things economic tend to gather around them. Economic terms are not deliberately 'woolly', but whoever wrongly termed economics as a science instead of an arts subject should be (in my humble and simplistic opinion) soundly whipped with their own economic model.
Recession is already defined in this post (click for the link) as being two straight quarters in which a decline in GDP (Gross Domestic Product) has been recorded. The most recent recorded recession has been blamed mainly on the Credit Crunch and in the UK, officially begun three years ago:
...and ended two years ago:

In real terms (spot the 'economic-speak'), the economy has been plotting a very wobbly course with tiny amounts of 'growth' being recorded and always threatening to drop straight back into decline.. When the figures for the last quarter were announced, it was the second negative figure in a row, therefore technically we are back in recession after a relatively short time of 'growth', and therefore we are in 'double-dip'.

So onto the second question... My own reading of the situation (for what it is worth) is that the economy although technically was out of recession for two years had never really established sufficient growth and therefore this latest headline announcement makes little difference to us. There is still not massive growth, everything is still very tentative although here and there, there maybe growth, in other places there is still decline to balance it out.
I think most economic observers will have to admit that an economy bumbling along with practically no growth, is pretty much the same as one that has just recorded a decline in growth as long as all the figures are so small.
To my mind, we are still in 'steady as she goes' mode whilst we wait for the emerging industries to shine through and the declining industries to reach their inevitable plateau.

Here's another question then... what happens if we come out of this and quickly into another period of decline - will it be triple-dip or double dip with a cherry on top?

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