WHEN is a recession not a recession? When it relates to politics, of course. Last week, in contrast with Germany and the rest of Europe, our Treasury Minister announced that Jersey was not in a recession, thank you very much.

And technically, it has to be said, Senator Terry Le Sueur is correct. As we all have been hearing several times a day in the past few months, the economy is in a recession if the statistics show two consecutive quarters of ‘negative growth’.

For the pedants who may be wincing at the contradiction in terms, that means six months of economic decline, however small. In the European Union, for instance, even a teeny weeny 0.2% decline can make all the difference between recession, or not.

However, the fact that a technical recession has not shown up in the figures does not mean that there will be no ill-effects in practice. The most obvious of these effects starts at the purses of ordinary folk watching their pennies a little more. Why take a taxi if you can save pennies by walking or catching the bus? Why go to a more expensive supermarket when budget shops offer the same items for less? In fact, why bother to buy some items at all, if you can do without them?

It isn’t the slightest bit of use for mortgage lenders and estate agents to tell us – as they have been doing repeatedly of late – that credit is still available and that lenders are willing to offer 95% mortgages. Why would anyone take out a 95% mortgage when they don’t have to move? There are also the legal fees, stamp duty on non-share transfer properties, removal costs, new basics like carpets and curtains, paying the Post Office to redirect your mail, reconnection of telephone and internet, and – for those upgrading from a flat to a house, or a larger flat – the probability that the mortgage payments will be higher month on month.

The housing market is likely to become increasingly static until people are confident that their costs are not going to go up substantially in the near future. The odds against that are high.

Firstly, those with pensions are likely to be asked to up their contributions in the New Year, particularly those with company pensions. No company going through an economic crisis is likely to want to shell out increasingly higher amounts for pensions.

Secondly, the 20 means 20 proposals are likely to be painful for middle income earners come January. This is particularly true in relation to the five-year phasing out of mortgage interest tax relief. No matter how placatory the explanations of the Income Tax department – and goodness knows I’ve sat through enough of those in the past year or so – the idea is to get those over a certain salary threshold to pay more. That’s why they are doing it. And who would willingly take on a higher mortgage when any tax relief will at best be short-lived?

Thirdly, 2009 will be the first full year we will feel the full effects of GST. Every little helps. It helps the Income Tax department. It does not help people who are trying to spend less because their income is not going as far as it used to.

Fourthly, pay increases are likely to be lower than in the boom years. Some companies will simply not be able to afford to increase salaries at all. In the UK there are cases where the workforce has agreed to work a three or four-day week and take a cut in wages in order to keep some kind of job and prevent the business from closing altogether.

Fifthly, prices will go up regardless. Stands to reason. If fewer people are buying things, businesses will have to put their prices up to cover their costs.
It may not be a technical recession, but by Jove, it will certainly feel like one.

APPARENTLY a Bank of England representative was in the Island last week. The reason we know about it is that the Economic Development department sent out one of their overwhelmingly useful ‘news’ releases.
It told us that John Whitley, the Bank of England agent for Central Southern England, had been in the Island on Tuesday ‘to meet with local politicians and businessmen’.

It seems that the idea of letting Isanders know about this was something of an afterthought, because the news release was dated Wednesday 12 November, the day after Mr Whitley’s visit. However, apparently he attended a breakfast at the Pomme d’Or attended by ‘local business representatives’ during which the economic outlook in the UK and in Jersey were ‘discussed’.

Furthermore, says the release, the visitor attended a lunch session at the Radisson Hotel, where ‘similar subjects’ were discussed with an audience that included ministers, Senators and again those anonymous ‘local business representatives’. Finally, the poor man met ‘representatives from Jersey’s larger business organisations, on a one to one basis, throughout the day’.

Perhaps in future the Economic Development department might like to let us know in advance of such a visit, so that members of the media, on behalf of the general public, can meet the visitor, ask him about the purpose of his visit, even take his photograph, and maybe put a few names to the faceless ‘local business representatives’ whose anonymous shadows graced his presence.

Remember that we, the general public, are probably paying for the arrangements made for this visit. And that we are probably paying media-handling experts to tell us about it.