To judge from the past...

Citigroup recently did calculations to compare with initial output fall (after two quarters) and the eventual cumulative output fall in the four most recent recessions, in the mid 1970s, the early 1980s, the early 1990s and the present recessions. The current one has not yet finished, of course, so there is a necessary forecasting element

The result is that the early fall was greater this time than in any other recession except the early 1980s, but that the fional output fall will equal that in the 1980s. This is on the assumption that output will fall in 2009 by about 3.5 percent. This final figure exceeds the maximum annual fall over the past fifty years.

Is the forecast figure likely to be the actual case? The UK has already suffered a 2.1% fall over the past six months, with 1.65% in the final quarter alone. The next six are expected to produce something like the final quarter of 2008. So in the year September 2008 to ASugust 2009, the increase could well be over 5%.

What will happen for 2009 as a whole? If recovery does occur as the (proxy) Chancellor stated in his November PBR, then even with a rise in output, it will take some going to overcome the 3% fall over the first six months and we shall finish 2009 down over the year.

If Mr. Darling was over-optimistic, as many feel, then even with a late recover in 2009 we are looking for something approaching a 5% fall for the year.

If UK utput were to fall 5% in a year then we would be approaching that 5.5% in 1931, during the slump. It could mean also a longer period needed for recovery, perhaps three years even to restore where we were in early 2008.