The d-word heard round the world

So how significant was Gordon Brown’s claim in PMQs that the world is in a “depression?” Those accustomed to his word-mangling wrote it off as another verbal slip. But as Dizzy points out, the world’s press were less sanguine. As a result No10 has spent much of the day trying to explain that we have a Prime Minister who mangles his words. And perhaps his slip was Freudian because it fits a trend. The other day, Stephen Timms, the Financial Secretary to the Treasury, told the Commons: 

“Today, we are in a recession—the first to hit the UK since the early 1990s and face some of the harshest economic conditions for decades, and perhaps for a century.”

Worst in a century, Mr Timms, worse than the 1930s?  Even the worst-case scenario, a 5.5 percent contraction in GDP this year, is not as bad as 1929. But taken as a whole, we may get there. Remember even in the 1930s, three in four working-age people were working. Today if we, as we must, add the expected unemployed to those on out-of-work benefits we may not be far off that. Britain recovered from the depression fairly quickly (for all Keynes’ bleating) – it could be five years before we recover from this downturn.

P.S. Here is the stir Brown caused:

* LONDON (Dow Jones)–U.K. Prime Minister Gordon Brown doesn’t believe the global economy is in a depression, a spokesman for his office said. * LONDON, Feb 4 (Reuters) – British Prime Minister Gordon Brown suggested that the global economy was in depression when he addressed lawmakers on Wednesday, but officials said it was just a slip of the tongue. * LONDON (Agence France Press) – British Prime Minister Gordon Brown made a slip of the tongue when he described the world economy as being in “depression,” his spokesman said Wednesday

UPDATE: Some more reasons why Brown might be right to say ‘depression’: In the first two quarters of the current recession, GDP has fallen by 2.1% – the total drop in the 1990s recession was 2.5%. We’ll dwarf that, easy. And the worst year of the Depression was 1931 (not 1929, as I say above) where UK GDP fell by 5.5% – so there is an outside chance we’ll do worse than that this year. Even if UK GDP falls by 3.3% (the forecast of CitiGroup), this too should be seen in its bowel-loosening perspective: no G7 country has recorded a YoY GDP drop of more than 3% in the last 50 years.