- A reversal of most of 2007's growth. Real growth in 2007 was approximately 3%, so this contraction would cancel most of it out. Not good, but if we had had just 0.1% growth for a couple of years rather than +3 and -2.8, would we feel differently about it?
- Cancelling out a quarter of the 'excess growth' of the last eight years. Long-run estimates of UK productivity growth are around 2%. GDP growth has averaged 2.7% between 1992 and 2008. Thus, we have benefited from an economy about 12% larger than it would have been under long-run conditions. If the price of this is to lose a quarter of this growth while the economy retrenches, then it was worth it.
GDP data taken from Office of National Statistics.