NIESR says recession is over but depression continues

11th June 2013

Economic thinktank, the NIESR says its monthly estimate of GDP suggest that output grew by 0.6 per cent in the three months ending in May after growth of 1.0 per cent in the three months ending in April 2013.

The NIESR estimates suggest that both the production and private services sectors provided significant positive contributions to GDP growth in the recent three month period.

The latest quarterly forecast (published 2nd May 2013) projects growth of 0.9 per cent per annum this year and 1.5 per cent in 2014. The private services sector is likely to drive economic growth through the remainder of this year.

The National Institute says it interprets the term “recession” to mean a period when output is falling or receding, while “depression” is a period when output is depressed below its previous peak. “Thus, unless output turns down again, the recession is over, while the period of depression is likely to continue for some time. We do not expect output to pass its peak in early 2008 until 2015.”

It has added a little note about past accuracy of its survey . It says: “Our track record in producing early estimates of GDP suggests that our projection for the most recent three-month period has a root mean squared error (RMSE) of 0.238% point (for the full sample period 1999Q3-2012Q4) when compared to the first estimate produced by the Office for National Statistics. For the period 2008Q1 to 2012Q4 the RMSE is 0.360% point. The impact of the adverse weather in 2010Q4 is a noticeable outlier. Excluding 2010Q4 from the analysis and the RMSE for the full sample period is 0.198% point, and for 2008Q1 to 2012Q4 the RMSE is 0.274% point. These comparisons can be made only for complete calendar quarters. Outside calendar quarters the figures are less reliable than this and they are also likely to be less accurate in the current disturbed economic circumstances.”

26 thoughts on “NIESR says recession is over but depression continues”

  1. MickC says:

    And in the meantime, insolvencies are up…

    1. Anonymous says:

      Hi Mick

      I had not seen that so thanks for pointing it out. For those wondering about the rise in personal insolvencies here is th elink.

  2. Noo 2 Economics says:

    Hi Shaun,
    What would you do to improve/eradicate the trade deficit?

    1. Forbin says:

      well we could go back to selling to the world instead of of that dead man walkin’ call the United State of Europe ( or the Franko-German Empire if you like )

      ” exports of goods to countries outside of the EU increased by £0.2 billion to £11.9 billion”


      exports of goods to the European Union (EU) decreased by less than £0.1 billion to £12.2 billion

      But we’d need a root and branch reform to back up of the toxic banking system we have

      too many pollies get well paid jobs in a single sector that , I believe , wags the dog of UK industry . Break that connection by banning anyone from coming in from the big finacials and going to the finacials after being in power ,

      that should help – because then the other industrial sectors will stand a chance

      As it is all we get are get rich quick schemes involving selling houses to each other …..


      1. Drf says:

        What exactly would you suggest then that we now any longer have to export which people in other countries wish to buy? Apart from a few luxury goods there does not seem to be much left, which the politicians have not already destroyed?

      2. Noo 2 Economics says:

        Are you talking purely about tangible “goods” but excluding services in your suggestion?

      3. Noo 2 Economics says:

        Sorry Forbin, I don’t know if you’re letting off steam or serious when you say “well we could go back to selling to the world instead of of that dead
        man walkin’ call the United State of Europe ( or the Franko-German
        Empire if you like )”, only it seems to me that if we gave up on Europe that would have a rather large impact on the UK – and we are already doing reasonably with America.

      4. Paul C says:


        I really do like that sector, I mean Mark Carney has been eyeing himself a job at Lloyds today, Corporate Ethics was the position he was pitching for. If we got this rule sealed then at least we’d stop Carney getting a concluding handshake to his housing subsidized BofE London existence.

    2. Anonymous says:

      Hi Noo2

      I have a few suggestions as to what we could do. For starters I would have the numbers reviewed and looked into as I am sure in this technological era we could do better. I do not doubt that we have had sustained deficits but I rather than say 2% of GDP it could be 1% or 3%.

      Also I think we could make a better fist of education as the rush to university expansion looks laudable but we lost a lot of technical colleges. I would look to bring them back and boost subjects like engineering. It is something we are good at (formula 1, Rolls Royce engines etc.) but seem unwilling to use it fully.

      I have a lot of sympathy for Forbin’s arguement that we should turn away from the obsession that out political class has with Europe. When I worked in Japan -admittedly a while ago- I left with the impression that the Japanese would buy more British goods if only we made more of a effort. Some of this starts at school I think with there being encouragement to study languages like Mandarin or Indian. Maybe some lateral thinking could be applied as there are of course plenty of Indian speakers in the UK.

      A national effort should be made to try and exploit the things we are often so good at inventing! Surely it can’t be as hard as we have made it look?

      So no magic bullet more on the Clive Woodward model of 1% here and 1% there.

      1. Eric says:

        Hi Shaun, Watching the Glasgow Games reminds me of the widespread opinion in New Zealand that the UK might have been better off if the Commonwealth had not been economically abandoned in favour of closer ties with Europe.
        I guess we’ll never know … but language would not have been a problem.

  3. Andy Zarse says:

    Hi Shaun, for all the BoE talk of rebalancing the economy, they didn’t actually seem to do much about it did they? My belief is that we can blame supply side policy all we like, but as ever this goes back to our friends running the banks. They still have a culture of lending preferring to lend on bricks and mortar. They never seem to lend to engineers or manufacturers, IT businesses or anything that could earn us an export dollar. It’s all property, mortgages, buy-to-lets and if anyone wants anything else they have to give security on their own home… Until this dynamic changes we won’t get anywhere.

    1. Forbin says:

      they didn’t actually seem to do much about it did they?

      Masterly inaction !


    2. Drf says:

      “…our friends running the banks.” They are not my friends; more like enemies I feel !!! But it is good to see that we have such capable and knowledgable people running the BoE. I think I will go to see my bank manager with similar stuff about my expanding over-draft! It is growing bigger Mr. X? Well, so what. Broadbent states that does not matter, so what are you getting umpty about?

  4. Pavlaki says:

    I was surprised by he IMF comments on the value of Sterling when it is still well under its trade weighted value and well under its historical averages against most majors. Are they using a valuation method we don’t know about? Having said that, the IMF’s record on forecasting just about anything us so abysmal I trust George and co will ignore it.

    1. Forbin says:

      “Are they using a valuation method we don’t know about? ”

      Yes , it doesn’t just include hookers and pot , you smoke the pot and then include Unicorns and magick moon beams and anything else you see in such “hightened ” state …….

      next to aid the economy will be Pensions Pot Scandal …… watch this space !


      1. Jim M. says:

        “Are they using a valuation method we don’t know about? ”

        Lick a finger and guess which way the wind’s gonna blow?

    2. Anonymous says:

      Hi Pavlaki

      I would think that as we have a persistent trade problem the IMF felt it had to say that the UK Pound £ was overvalued!

  5. dutch says:

    I presume ‘overseas balance sheet’ includes BP’s Russian assets?

  6. dutch says:

    ‘ Large fluctuations in capital flows are inherent to financial
    transactions in countries with a large financial services sector. This
    volatility is a potential source of vulnerability.’

    No sh1t Sherlock.

  7. dutch says:

    ‘ Large fluctuations in capital flows are inherent to financial
    transactions in countries with a large financial services sector. This
    volatility is a potential source of vulnerability.’

    No sh1t Sherlock.

  8. dutch says:

    Another thought.If RBS gets liquidated during the next financial crisis,to sustain the illusion of wealth,I assume we’ll need a UK white knight to come along and pick their assets up?

    1. Anonymous says:

      Hi Dutch

      To answer your questions then yes both BP foreign assets and liabilities would be counted as it is a UK company. As to RBS it would depend on how it was broken up but do we have any white knights of that size?

  9. Paul C says:

    Yes Shaun, they are all living in a parallel universe, propped-up with QE and related asset bubbles. I guess we wouldn’t need to print so much of the stuff if the US, EU and Asian investors started throwing our Sterling back in our faces. We could use the money to wedge up the foundations of our decrepit transport system, we could shred the notes as insulation to go into National Trust piles with rather high bills because of the Russian energy embargo. I can see lots of uses for a falling pound…..

  10. Eric says:

    Awesome Shaun. The next time I have a deficit on my current account I’ll tell the bank I’m not bothered because it’s due to the fact that interest on my savings hasn’t recovered from the temporary albeit protracted effects of ZIRP.

  11. Anonymous says:

    Shaun, Mr. Broadbent refers “sterling’s ejection from the ERM in 1992 and the introduction of inflation targeting and rules-based fiscal policy that followed”. Of course an inflation targeting regime was introduced within a month of Black Wednesday, but what does “rules-based fiscal policy” refer to? When I tried to look into it I found some reference to a Golden Rule and some other rule that Gordon Brown introduced when he became Chancellor of the Exchequer. Is that what Mr. Broadbent is talking about? Rather a long gap between the monetary policy and the fiscal policy initiatives I would say, as the speech suggests that they occurred about the same time. Are Mr. Brown’s rules considered so excellent they have been adopted by every subsequent Chancellor of the Exchequer? Andrew Baldwin

  12. Jer says:

    “clearly unlawful”
    So, who’s going to prison?

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