A comparison with the last three recessions suggests that National Statistics' current estimate of a fall in GDP of 5.7% between the first quarter of 2008 and the second quarter of 2009 will be revised to show a significantly smaller decline over coming years. This claim is supported by labour market indicators, which, though weak, have deteriorated by less than would have been expected given the estimated GDP drop.

The Bank of England has helpfully compiled a "real-time" database of national accounts statistics that, for some series, including GDP, extends back to 1976. Following the end of the recessions in 1974-75, 1979-81 and 1990-91, GDP was estimated to have declined from peak to trough by 4.6%, 6.5% and 4.3% respectively. In the latest vintage of statistics, the falls are 2.7%, 6.0% and 2.5%. So revisions have cut the GDP drop by 1.9 percentage points for 1974-75, 0.5 pp for 1979-81 and 1.7 pp (after rounding) for 1990-91.

The smaller adjustment in 1979-81 may be misleading because revisions have also resulted in a major change to the profile of the recession. The originally-estimated 6.5% GDP decline referred to the change between the second quarter of 1979 and the third quarter of 1981 but the recession trough was subsequently shifted to the first quarter of the latter year. The latest statistics show a 4.6% GDP decline over the original recession period.

These comparisons indicate that the current estimate of a 5.7% GDP decline by the second quarter of 2009 could eventually be revised down by as much as 1.9 percentage points. A simple model for GDP growth based on changes in vacancies and claimant-count unemployment confirms that a substantial adjustment is possible. The model tracks the GDP falls in the last three recessions reasonably closely and suggests an annual decline of 3.7% in the first quarter of 2009 versus a current official estimate of 4.9% – see chart.