The world is in a financial recession but surprisingly enough many people have no idea exactly what a recession means. They understand how it affects them with the cost of living rising higher and higher without paychecks getting any bigger. Many people are losing their homes and vehicles or having to file for bankruptcy or IVAs because they no longer can handle their debt  obligations thanks to a cut in hours, job loss, or simply due to the higher cost of living.

So what exactly is a recession? According to the United State's National Bureau of Economic Research's (NBER) definition, a recession is "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales". Each country, however, has their own method of assessing whether or not they are in a recession. In the United States, the NBER uses a business cycle dating committee to make that judgement as to whether or not the country is in a recession.

Based on the definition as stated above, the United Kingdom has not been in a recession for more than 15 years. Yes, the country is now in a recession, but if the country's economy is measured on this definition, then the United Kingdom technically is not. The country has not had one three month period of negative economic growth since 1992, and that is one way the country has been measuring their economy and the way it has been growing or shrinking the last decade and more.

The United Kingdom has actually been enjoying what is considered the longest spell of ‘sustained growth' since the 18th century and the beginning of the Industrial Revolution. How accurate that data really is though is questionable, simply because quarterly data measurement has only been available for a little over fifty years.
Economists feel that the current definition of a recession is flawed because an economy would technically not be in a recession if it contracted by 5% during the first quarter of the year and expanded by at least 0.1% in each of the next two consecutive quarters, with a final 5% contraction for the year in the last quarter of the year. A recession would see no growth past 0.1% in the second and third quarters of the year, even if the first and fourth quarters saw the 5% growth.

Is this a good measurement of the United Kingdom's economic growth or shrinkage? It depends on the economist you happen to be speaking with at the time. Some economists feel a better measurement of a country's economic condition is by reviewing a full calendar year. A full calendar year of negative economic growth would cause the term ‘recession' to be applied to a nation's economy. The United Kingdom has had economic growth averaging 2.5% over the last few decades, and only five times since World War II has the gross domestic product fallen on an annual basis.

While the technical definition of a recession sees the United Kingdom in good straits, the effects of the recession are still being felt by the common citizen, enough so that the country is considered to be in a recession, definition notwithstanding.