The fall in output in the current recession has been sharp. In the US, for example, gross domestic product fell at an annual rate of just above 6 per cent in the two most recent quarters. In Japan, GDP is down by nearly 9 per cent on its 2008 first-quarter peak. The latest UK data suggest output is nearly 6 per cent lower than a year ago, the sharpest fall since 1931.

The conventional wisdom is that the steepness of the fall means the recession will be long, and that the recovery when it happens will be anaemic. In the UK, for example, the National Institute of Economic and Social Research argued last week that GDP per head would take five years to get back to pre-recession levels. This was despite an earlier declaration by the think-tank that the UK has been moving out of recession since output reached a trough in March.