Recession watch

It beggars belief that Britain's economy is shrinking at the fastest pace since 1980.

The early Eighties saw a truly awful recession that inflicted huge social damage on the nation with riots on the streets, the closure of one in three factories and a generation locked out of employment for life.

But eventually it become fashionable to see Margaret Thatcher's brutal "there is no alternative" strategy — widely reviled at the time — as a grisly but necessary dose of medicine. The Great British Economic Miracle ultimately delivered an unprecedented period of non-inflationary growth and a lean, competitive modern economy.

All those assumptions will have to be challenged now that the new "miracle" economy, with its addiction to under-regulated financial services, has proved to be so fatally fragile.

At least Margaret Thatcher was honest with the electorate. The medium-term financial strategy that inflicted such damage on Britain's productive output was a deliberate shock-treatment policy.

This time the Government has been caught on the hop, its complacent "no more boom and bust" promises turning out to be empty words. All the bail-outs, VAT cuts and record low interest rates have not yet produced even the tip of a single green shoot.

Frighteningly, unemployment is already higher than the 1.7 million level seen in 1980. Back then it continued to rocket for four years until it peaked at 3.26 million in 1984. The total did not fall below 2 million for another 13 years.

Translated to the present day that would mean unemployment staying above today's levels until 2025. That could not happen, surely. Could it?