Recession. It is only one word after all, but it has surprisingly many interpretations. If you are to believe some reports we are now out of recession. So that's it then. Grab the bubbly, turn on the music and let's all party. Not so fast, because the truth may well be a different story. Figures can be interpreted in so many ways that it is often difficult for us to know the difference between reality and spin.
Growth figures for the last quarter of 2009 show that the UK economy grew by only 0.3 percent in that quarter, which after an initial false alarm that threatened to not show any growth at all, came as a relief to the City as it was in the end what it was expecting. So, as the final figure was revised upwards from an initial calculation of only 0.1 percent and potentially could have gone the other way, we may not really be out of recession after all, because there is not really a lot of leeway to play with here.
We should instead perhaps look at this in context with other quarters. The last six quarter figures prior to the end of 2009 were all in the red and amounted to the longest continuous period of decline since quarterly figures began to be announced some 45 years ago. So it should come as little surprise that any possible opportunity to announce a positive trend in the economy, however minor, will be eagerly welcomed with open arms. So whilst we may all so desperately wish for this positive result to not be a false dawn, the outlook is still relatively bleak, with some City economists suggesting that the figures did not change the overall economic picture, which remains weak.
So put the bubbly back in the fridge and turn off the music then? Yes and no. The acid test for many analysts is the upcoming first quarter 2010 results. If there is continued growth announced, then we may all have something to shout about. Surely two consecutive quarters of growth is a clear signal that we are finally out of recession. It will be a much stronger indicator than the weak shuffling growth announced at the end of 2009.
And why should there not be sustained growth, particularly as the rest of the G7 countries have all reported that they are officially out of recession? It looks as if the UK was the first to go into recession and will probably be the last to come out of it. But the more pessimistic in the financial sector are not expecting it to happen yet. Some remain convinced that we are heading for a 'double dip'. Their mantra is that the last quarter rebound was fuelled by manufacturing expanding by 0.8% and strong growth in computer, legal and accountancy services, whilst banking and other financial services stayed weak and government services were flat.
Some warned that the economy could slip back into recession in the first three months of this year. So we can but hold our combined breaths and eagerly await the next set of quarterlies, which just might be the green shoots for which we are all waiting, finally confirming that we are coming out of recession. Or they may plunge us back into the red mists once again.
Marc Ostwald at Monument Securities was quick to point out "the pick-up in manufacturing probably owes as much to restocking as anything else and that may also be the case for services". Richard Lambert of the CBI estimates that it will be 2012 before the economy is back where it was before the recession started.
There is of course another side to all this. A positive factor that may well point to the UK finally coming out of recession. The Budget has been announced for late March (near the end of another very important quarter) and a General Election will be held not too long after that. The timing could not be better for political spin doctors to light the afterburners and go into full blown overdrive. With the forces of darkness on the back foot and every politician wearing a smile, it might, just might be the perfect platform from which to launch an assault on the economy so that recovery from recession could actually be a reality.
And that finally, would be the perfect opportunity to get that bottle of bubbly out and turn the music way, way up.