Show Hide image 25 April 2012 Does it matter that Britain is back in recession? The news was bad either way. So why does it matter which side it fell? So Britain is back in recession, according to the preliminary estimates released this morning. GDP fell by 0.2 per cent over the last quarter, following a dip of 0.3 per cent last quarter, giving up two straight quarters of contraction and fulfilling the definition of a technical recession. The news is bad, certainly. But is it any worse than if we weren't? If George Osborne had had a good morning, the economy would have grown by 0.1 per cent. If he'd had a really good morning, it might have gone up by 0.2 or 0.3. But news like that would still leave Britain in interminable stagnation, with output around 4 per cent lower than it was before the crash and no sign of it returning to that level, let alone back to pre-crisis trend levels, for years to come. If the good news is no better than the bad, why does it matter which actually occurred? There are tangible differences between the two situations, of course. For one, output is 0.3 per cent lower than it would have been in Osborne's best-case scenario, which is a noticeable difference, equivalent to an extra 1.2 per cent growth over the year. For another, actually being in recession could have a nasty feedback effect, hitting consumer confidence and depressing the economy further. But the big reason why we care is political, not economic. Being in recession hands the opposition a very big stick labelled "hit the Chancellor with this", and makes it very hard to respond. While it will undoubtedly have an effect on the opinion polls, the focus on recession is harmful to the longer-term state of economic discussion, because it lets the chancellor's office respond like this: George said in the autumn statement that if Europe went into recession it would be hard for the UK to avoid one. Eurozone now forecast to be in recession as well as non euro countries like Holland, Denmark, Czech Republic. One thing that would make it worse is yet more borrowing. It sounds like an excuse (and it is, of course), but it is also probably true - or true enough. The difference between being in technical recession and being in mere stagnation is contingent on many factors, both domestic and international, some under the chancellor's control and some not. What focusing on whether that last 0.2 per cent of shrinkage means is that we ignore the 0.5 (or more) per cent of growth lost to the perennial stagnation that we are in, which is undoubtedly due to the chancellor's policies. The economy contracting by 0.5 per cent in the last two quarters is bad. But it's not really worse than the economy being completely flat over the last year, which is an outcome that could have happened without ever entering technical recession. We need to be careful about what we emphasise and don't, or we end up with economic commentary that completely ignores the actual state of the economy. It is a line we heard from the left for much of the last quarter, especially during the occaisional periods when it looked like output might be higher than it was, but just because the argument has swung back in their favour, doesn't mean they should drop it. By Alex Hern Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.