Domesday Live

What is a recession?

A recession is usually defined as two quarters in a row in which the economy shrinks, measured by GDP. It tends to mean rising unemployment, falling incomes and less tax collected. The UK's sharpest recent recessions were in 2008 and 2009, and in 2020 during the pandemic.

Why it happens

• What is measured. GDP is the total value of what the country produces. The ONS publishes it every quarter, with a monthly estimate in between.
• Why it hurts. Firms cut jobs and investment, people spend less, and the government collects less tax and pays more in benefits, so borrowing rises.
• Why the definition is rough. Two quarters is a rule of thumb. Some economists look at jobs, incomes and output together, and the ONS later revises GDP, which can change the verdict.