Be brave to beat credit crunch
May 12 2009 by Neil Warwick, The Journal
PEOPLE tend to fear what they do not understand. Now that there is an acceptance that the UK is in recession, there needs to be an understanding of what recessions are, how frequently they occur and how long they last so that we can start thinking about when the region can expect to see the upturn.
At recent networking events, there have been fairly trite and slightly patronising comments made. Paraphrasing, it is along the lines of “many of my younger employees have never experienced a recession”. Statistically this is highly unlikely.
In the 20th Century there were 20 recessions. Of these recessions five of them were major for the UK: post war 1919-1921; Wall Street crash 1929-1931; the financial crisis of the 1970s; recession in the 1980s (technically two recessions) and the recessions of the 1990s.
When we look at the overall statistics, the longest – and arguably worse – recession was the Wall Street crash of 1929 which lasted 43 months. However, the shortest was January 1980 and lasted six months, but then moved into the 16 month recession of 1981-1982.
In the North East, we were obviously chronically affected by the recessions of the 1980s, were caught by the 1990s recession, particularly in the property sector, but slightly missed out on the 2001 dot.com bubble bursting as we had less exposure to the dot.com market. The fact that we missed out on the 2001 recession in this region means that it has been 15 years since the last real recession here.
Economists have to pick a date that shows when the whole economy went into negative growth, or two consecutive quarters of GDP negative growth. Apparently from the economists perspective the date for this recession in the UK is January 23, 2009.
However, the North East – much like Florida in 1927 – was caught by the sub-prime collapse in 2007. If history repeats itself the North East should start climbing out a little bit earlier. When thinking about when the North East will emerge from this recession, it really depends on whether you want to look at this from an economists perspective or from that of an historian.
Neil Warwick is a partner at Dickinson Dees
