Martin Weale begins by reviewing historical data in an attempt to understand the UK’s difficulty in recovering from the recession which began in 2008. Weale suggests that there are only two factors which appear to help predict the length of time that output remains depressed following a recession: the current account and the occurrence of banking crises. But even accounting for these factors, Weale concludes that the UK’s recovery is unusually slow: “...at the outset of the recession output in the UK would have been expected to be depressed below its previous peak for only two years...the central path of the MPC’s latest forecast implies that it will probably take five and a half years for output to recover to its previous peak”.
Published on
25 November 2011
Press release