The UK Office for National Statistics has paved the way for erasing Britain's double-dip recession from the history books, arguing in an article on Wednesday that the state of the economy since autumn 2010 is better described as "flat".
The standard definition of a recession is two consecutive quarters of negative GDP growth, and the ONS's current estimates show nine months of consistent decline, starting in the final quarter of 2011.
But with revised GDP figures for the last few years due to be published on 27 June, the ONS used its latest Economic Review to point out that two of the relevant quarters saw just a 0.1% fall, and the third – April to June 2012 – was distorted by the extra bank holiday for the Queen's diamond jubilee.
"When growth is very weak, the difference between, say, estimated growth of 0.1% and -0.1% in a quarter is actually within the statistical margin of error," the ONS said. "Rather than relying on small changes in quarterly growth rates to justify calling a recession, we should consider the growth rate of the economy over a longer period".
Since the third quarter of 2010, the report added, the trend in economic output was "best described as one that is flat or at best gently rising".
A spokesman for the ONS insisted that the data was just as likely to be revised down – making the double dip deeper – as up. But City analysts said they wouldn't be surprised if the recession eventually disappeared from the official records.
Chris Williamson, of data provider Markit, said: "I think we're in for some fairly significant revisions, and they seem to be pointing to that period where the official figures show a double dip, but the business surveys were strong."
The ONS report was published as respected thinktank the National Institute for Economic & Social Research revised up its forecast for GDP this year, but cautioned that the latest estimate of 0.9% growth would not have much impact on the jobs market.
It said a report by David Bell of the University of Stirling and David Blanchflower, a former Bank of England policymaker, showed that labour market slack was higher than implied by the unemployment statistics.
According to an index created by the two economists the number of people under-employed has grown faster than unemployment. They found that a large proportion of full-time staff, part-time workers and the self employed want more hours than their employers are prepared to offer to boost their take-home pay and living standards.
They said: "The conventional measure of the difference between supply and demand in the labour market is the unemployment rate. But it does not capture a phenomenon which has become increasingly important during the current recession - underemployment."
One implication of the study, they said, was that employers were likely to increase the hours of existing workers before hiring new staff, making the situation for younger job seekers tougher.
"Even if there was an upturn in demand, employers would likely extend the hours of existing workers before taking the risk of hiring new young employees," they said.
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