‘Ordinary' recovery seems very unlikely

While job losses have been milder than those seen in previous recessions, it might be tempting to think, despite an extraordinary recession, we are set to enjoy an ordinary recovery.

That seems unlikely. The authorities have played their trump cards to prevent a slump into depression and do not have the capacity to repeat the experiment. At the same time, they are mindful of the dangers of withdrawing these stimuli too soon. Ahead of us lie public sector cuts, higher unemployment and tax rises to cover the fall in tax receipts. All of these could prove to be obstacles to economic growth. Higher oil prices might also dampen recovery prospects. Moreover, those who put their faith in a China-led recovery could be disappointed. Much of the rebound in Chinese demand fo...