June 19, 2024

I say recession, you say depression, so let’s call the whole thing off

Steve Herbert, Head of Benefits Strategy at Howden Employee Benefits & Wellbeing, reflects on the importance of keeping perspective as we look at the UK’s current economic outlook

Recession:  In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters. (Wikipedia)

Last week’s GDP figures from the Office for National Statistics (ONS) were brutal.  The record drop of 20.4% in April was published in the same week that the OECD predicted that the UK economy would suffer more than most in 2020.  And all this news came just a month after headlines screamed that there had been a huge climb in people claiming state benefits and support.

It follows that economically speaking things are very bleak indeed, and it’s difficult to conceive of a peace-time situation comparable to our current predicament.


What’s in a name?

Of course the debate is already raging as to whether the nation is now entering a period of recession or depression.  Many column inches will be given over to this debate, yet naming the type of downturn really won’t change a thing for most of us.  We are where we are, and as a nation, as businesses, and as individuals we will all need to navigate our way out of the economic morass that we now find ourselves in.

Of course there will be many practical challenges to this.  But at least part of that journey will be about the way that we as individuals view the problems before us.  And with this in mind, I give you the 33rd President of the United States of America, Harry S. Truman, who once famously said;

“It’s a recession when your neighbour loses his job; it’s a depression when you lose yours.”

In that one statement Truman captured the nature of economic challenges so much more truthfully than any technical “catch all” definition ever will.  The truth is that we all perceive events through our own personal prism.

For at any point in any economic cycle some do well, and some will suffer.  All that changes is the ratio of good v bad outcomes according to where we are within that cycle.  That is as true of this crisis as any other.  Some sectors, businesses, and individuals will decline, and conversely a few will prosper.  But most of us will just muddle through like we always do.


Lessons from history

Indeed you don’t need to cast your mind back very far (just 13 years in fact) to recall another time that the nation did just that.  The credit crunch of 2007 was often described at the time as a “once in a century” occurrence.  If nothing else the current crisis confirms that such statements are meaningless until viewed with the benefit of hindsight.

And, as bad as the 2007 recession (and the years of austerity that followed) was, it’s instructive that so many of us retained our jobs and livelihoods, and are still here to tell that tale now.

And even in my working life this is not an isolated incident.  When I first joined the UK’s workforce in the 1980s the country was (once again) in the midst of a very harsh recession, with the unemployment rate then routinely above 10%.  That sounds – and indeed was – very difficult for those entering the labour market and those that lost their jobs during the downturn.  But again it’s about perspectives.  The reality is that nearly 9 in 10 of the available workforce were still gainfully employed, and the economy did indeed continue and eventually improved.

And a quick look back across the 20th Century will identify many other major and minor recessions, and at least one significant depression. Yet life – and business – went on through them all.  And eventually the good times returned for most.


That’s easy for you to say…

I really hope that this is not coming over as glib, or even worse, condescending.  Neither is intended.  And to be honest I am much more worried about things than many reading this column will currently be.

I also fully accept that none of us knows what this particularly economic downturn will mean for our income, our jobs, or our family and home life.  But I am trying to offer a little hope and perspective in the face of so much negative information and bad news.

The thing is that bad times always feel like they are “the worst ever” when you are experiencing them first hand.  But sometimes they might be nothing more than a bump in the road, and of course some unexpected good things can also arise from such situations too.

In the end we are all at the mercy of the dice of fate to some degree, and much more so in such uncertain times.  As individuals it’s unlikely that we can change the macroeconomics of what is happening, but a positive personal perspective might just help weight those dice in our favour.


So let us all try and look beyond the rather meaningless titles of recession or depression. This may – or may not – be a “once in a century” event, but it’s important that we all try to react to it well by focusing on what we can control, and not the things that we can’t.

Steve Herbert is Head of Benefits Strategy at Howden Employee Benefits & Wellbeing