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For most people this is still the phoney recession.
Just as in 1939 war was declared and then for months after the initial shock nothing happened, likewise for most people who have not actually lost their jobs this does not yet feel like a recession.
We have had the near collapse of the banking system but, since then, the lowering of interest rates on mortgages and the drop in fuel costs have boosted disposable income, in spite of the biggest fall in national output since the Thirties.
Unless they have lost their jobs or gone on short-time working, most people feel better off.
They wonder what the fuss is about. They won't need to wonder much longer.
Just as the phoney war ended with Dunkirk and a struggle that was all too real, so the opening phase of the recession will soon come to an end.
No one feels bad in summer, what with the holidays beckoning and the long light evenings and going one up against the Australians in the Ashes.
But come the autumn, the present green shoots could easily have gone brown and the recent boom in the stock market look like much too much, much too soon.
There is, of course, reason to hope, for as consultant Paul Ormerod said this week, the vast majority of recessions are over within a year which means we could legitimately expect to come out of this soon.
But that is not really the point. While pointy-headed economists spend a lot of time these days discussing what shape this recession and recovery will be a V meaning a sharp fall and equally sharp recovery; a U meaning a prolonged bump along the bottom before that recovery; an L meaning the bumps go on and on, or a W my personal favourite which means that we will have another fall first the real thing we should worry about is what kind of world we will inherit when we are finally back on the road.
The truth is that no one knows what shape this recession will take. There are arguments in favour of all but ultimately they all come down to a debate about one thing: how easy will it be or how costly to clear up the mess?
A Japanese proverb says that while you stop the smell of stinking meat by putting it in the freezer, you should never forget that the meat is still rotten.
Thus with our economy. Government aid has prevented the collapse of the car industry, the banking industry and a string of other activities but that does not mean these now become healthy.
The freezing buys time while we work out what to do; but ultimately we will have to face the pain of dealing with all that rotten meat.
If we have global demand for 60 million new cars a year, we cannot ignore forever the fact that we have the capacity to produce 90 million.
There have to be cuts, and in shipping and in airlines and in a host of other activities which were seduced into over-expansion in the boom years.
This, and how we adjust to life and rebuild amid the ruins, are the real questions we have to face, not what happens in the next six months.
We are living in the midst of a global shift in economic power from the West to the East, and the rising power of China means we will have to pay more for much of what we previously took for granted not least food.
The good news is that there is a coming world boom; the bad news is that we may not be part of it, just as until recently most of Asia was not part of ours.
What we should not lose sight of is that almost everyone in this country has been made permanently poorer by the contraction working its way through the economy, by a loss of output which will never be replaced, and the destruction of wealth caused by the fall in asset values.
Nor should we forget that we have already eaten a lot of the seed corn.
For 10 years after 1997, we spent 105 per cent of our income, because we could cover the gap with borrowing secured against property.
Now it is payback time, meaning in effect that for the next 10 years we will be able to spend only 95 per cent.
Coming out of this crisis, growth rates are going to be much lower, partly because we will have to invest more to re-balance the economy, partly because we have a mountain of debt in infrastructure, Private Finance Initiative projects, private equity deals and commercial property, all of which will have to be paid down or written off even before we get to personal problems with mortgages and credit cards.
And we will have to pay more tax, not just because government is hitting its borrowing limits, but because the £60 billion paid in corporation tax by the financial sector has disappeared and will have to be made good.
Last time around, Mrs Thatcher in the early 1980s used North Sea oil and privatisation to close the gap and it was still pretty painful.
Unfortunately there is not much family silver left to sell: this time it could easily be much worse.
Recognising this, a member of the Bank of England's Monetary Policy Committee said the other day that the country needed 10 years of fiscal restraint which is bankspeak for 10 years of high tax but low spend.
How much tax? He did not say, but given the size of the budget deficit, we are looking at a basic rate of income tax rising towards 30p in the pound, or a VAT rate increasing from 15 per cent to 22.5 per cent or most likely a bit of both.
All this presents an interesting challenge for our politicians as they prepare for the next election. They can do the sums as well as anyone.
But only the Liberal Democrats, through Vince Cable, even come close to talking about it.
The others do warn us that we will have to lose weight but at the same time say we can continue to feast on chocolate. Sadly theirs is another phoney war.
Reader views (1)
Actually even if you are one of the lucky ones whose mortgage rate goes up and down with the interest rate to its lowest level, you will still feel the pain with the massive drop in property values. The percentage wiped off an average home in London during the lat year is enough to make anyone feel fearful and caution and aware they are hit by the recession. Extra disposable income? Well for some, of course, but what there is is not going into the pockets of private business through sales - it is going on more government tax for what we buy and on higher charges for monopoly and government provisions. Yet more tax on airfares, higher personal taxation etc...and of course the EU is not going to allow us to keep our VAT rate at 15% beyond the end of the year (unless we beg or hand over another chunk of our powers to it), so at the end of the year there will be another 2.5% on that as well.
- Damian Hockney, London, UK, 29/07/2009 21:55
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