Well, that was quick. Bank of England governor Andrew Bailey appeared in front of Parliament today and declared, if not quite that happy days are here again, then that the recession isn't all that bad and might, in fact, already be over.
Speaking to the Commons Treasury Committee, Bailey said: “Against a lot of talk about what is we think is going to be a very small recession, we think the economy is already actually showing distinct signs of an upturn.”
The governor pointed out that, compared to recessions dating back to the 1970s, the 0.5 per cent cumulative reduction in GDP in the third and fourth quarters of last year was "the weakest by a long way".
Side note: stressing that the recession isn't all that bad relative to previous contractions is correct. At the height of the global financial crisis, the UK economy shrank by 2.6 per cent *in a single quarter*. But it is also only something an unelected, independent central banker could get away with saying. Even a politician as occasionally tone-deaf as Rishi Sunak knows not to make that particular point. Not least because, while the recession may be weak, so too was the period of growth that preceded it.
It is also important not to obsess over tiny changes in economic data for a couple of reasons. First, the real-world difference between a contraction of 0.1 per cent and flatlining is negligible. And second, these figures are always subject to revision. Remember the double-dip recession of 2012 that never was?
Bailey committed a bit more news today, when he suggested that inflation, currently stuck on 4 per cent, need not reach the Bank's 2 per cent target before it begins cutting interest rates. He noted:
"We don't need inflation to come back to target before we cut interest rates, I must be very clear on that, that's not necessary." This neatly chimes with comments made yesterday by the Bank's former chief economist, Andy Haldane, who warned that keeping interest rates high for too long risked "crushing" the economy.
The presentational problem for the Conservatives is that a 'light recession' is still a tough sell. The reality of two consecutive quarters of contraction empowers all the other parties and the media to employ one of the rare economic terms that pretty much everyone understands.
The substantive problem is everything else. While inflation is expected to return to target (the job of the Bank, not the government), the prime minister's other priorities (growing the economy, getting debt falling, cutting NHS waiting lists and stopping small boats) are all somewhere between in doubt and definitely not being met.
The challenge for Labour, should it win the next election, is that the party will inherit this economy, be compelled by necessity and ideology to pour billions into public services all while pretending to be tough as old boots about its fiscal rules.
In the comment pages, Anne McElvoy suggests Keir Starmer and Kemi Badenoch have one thing in common — and it's about class. While Melanie McDonagh says Trafalgar Square's Fourth Plinth sculpture is how to do London public art — and the latest selection proves it.
And finally, it’s like a running club, but more chilled and less insufferable. Katrina Mirpuri reports from the front lines of the capital’s latest craze – walking groups.
