A recession that never went away?

News that the UK is back in recession may have come as a shock to some – not least commentators who expected growth in the first quarter of the year. But for some people struggling with debt, the mood of recession may never have gone away.

On the one hand, there are those who have simply refused to believe the figures showing a 0.2 per cent dip in gross domestic product (GDP) are accurate, such as Rupert Watson, Head of Asset Allocation, Skandia Investment Group.

He said: "The GDP report is not consistent with most of the other data that has been released, which suggests the UK grew modestly at the start of this year."

Mr Watson added that the latest Construction Confidence Index had seen an increase, which was at odds with the official data suggesting a three per cent dip in the sector's output.

Chief economist at Lloyds TSB Patrick Foley expressed similar views, noting the initial estimates for GDP are often substantially revised and again singling out the construction sector figures as being particularly questionable

However, he also noted: "The unavoidable fact remains the underlying trend in the economy is flat," pointing out that the extra bank holiday in June for the Queen's Diamond Jubilee could lead to another quarter of negative growth and cautioning that the expected improvement in economic conditions in the second half of the year is dependent on the eurozone situation not getting significantly worse.

The "underlying trend", of course, is what concerns many people, with low growth being accompanied by wage freezes, persistent inflation and high unemployment. And all this makes life harder for those who are in debt.

Joanna Elson of the Money Advice Trust said: "Whilst the technical recession might have only just returned, unfortunately the people's recession never really went away."

She said the organisation's own research has suggested as many as 1.7 million people will seek help from its debt helpline and Citizens Advice, compared with 1.46 million last year.

"Yet this only scratches the surface of the problem, with evidence suggesting one in five UK households are having difficulties meeting credit commitments," she added.

The comment that the recession had persisted for some was echoed by the chief executive of the Child Poverty Action Group, Alison Garnham, who said this was the case for families who have "endured a miserable few years coping with rising living costs, job losses, wage freezes and cuts in social protection". She called for recent cuts in family tax credits to be reversed.

Britons struggling with debt may find the best approach they can take is to seek help and advice at the earliest possible juncture, rather than waiting and hoping for the economy to improve. Even if the recession is short lived, or if a revision in the figures indicates there has not been a double dip after all, the recovery promises to be a slow and gradual one.

But by seeking a debt management plan, finding out ways to cut credit card debt or even taking out an individual voluntary arrangement if the amount owed is £15,000 or more and essentially unpayable, consumers can do much to ease their own personal feelings of recession.

By Joe White