David Prosser's Outlook: Learning the lessons of a time that many people can barely remember

First, a little bit of good news for Messrs Brown and Darling. Whatever all the miserable headlines they'll be reading today might claim, economic growth actually wasn't quite zero in the second three months of the year. The Office for National Statistics' precise numbers show our economy actually grew by 0.000374 per cent between the end of March and the beginning of July. And before the cries of pedantry start ringing out, that equates to £118m. Or, put another way, every man, woman and child in this country was roughly £2 better off at the end of Gordon and Alistair's triumphant 64th successive quarter of economic growth. Don't spend it all at once.

It's difficult to imagine the Prime Minister would get away with this argument. But at the very least he is entitled to insist we do not fire the gun on recession watch straight away. There still needs to be two successive quarters of negative economic growth before the UK can formally be declared in recession, and the counting has yet to begin.

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Still, this is pretty much the only silver lining to which the Government can cling, because both the headline figures and the small print in the ONS revisions yesterday were unremittingly grim.

The only reason we didn't fall into negative territory during the second quarter was that imports fell back very significantly. Exports fell too, but by less, so, on a net basis, they made a positive contribution to the growth figures. Elsewhere in the figures, investment fell by 5.3 per cent – the worst performance since 1985 – while household spending dropped from growth of 1.1 per cent in the first quarter to a fall of 0.1 per cent. Dismal stuff.

Those household spending statistics, by the way, are another blow to the credibility of the economic data now being produced across government. On Thursday, the ONS's claim that retail sales rose 0.8 per cent in July was ridiculed by the trade itself, just as a similar claim had been in May. And the collapse in consumption growth certainly seems to fly in the face of previously announced data.

The sell-off of sterling that followed yesterday's figures reflected a widely expressed view that the unexpected speed with which the economy now appears to be moving into reverse is likely to prompt interest rate cuts sooner than we had been expecting.

However, don't be too quick to accept the conventional wisdom on rates. It's worth pointing out that the Bank of England's inflation report, published at the beginning of last week, included some pretty gloomy forecasts for the economy. So these depressing growth figures may actually be no worse than the Bank's Monetary Policy Committee has been expecting – in which case, there is no reason for it to move any quicker on interest rates than it would have done before yesterday's announcement.

Were it up to the Prime Minister, of course, we'd get interest rate cuts as soon as possible, to soothe the nerves of cash-strapped mortgage borrowers and to provide a populist boost to the housing market. But while Mr Brown's economic legacy is looking more tarnished these days, his first achievement, giving the Bank of England independence, remains intact. And the whole point of that policy was to take monetary policy out of the hands of decision-makers likely to be driven by political considerations. The Bank will cut rates only when it is confident the threat of inflation – now an embarrassment to Mervyn King – is definitely receding.

It has been almost 16 years since the last technical recession in this country ended, which means a whole generation has moved into the labour market without ever experiencing a downturn. For them, and for anyone else with hazy memories of the early 1990s, it's worth revisiting the past.

Indeed, doing so might, in one sense, give the Government some comfort. In the summer of 1992, 2.5 million people were claiming unemployment benefit, three times as many as today, while interest rates were twice their current level. House prices were falling more quickly, at a rate of 3 per cent each month, compared to only 2.5 per cent in July 2008. Even better for Mr Brown, despite a distinctly unpopular message from the then chancellor, Norman Lamont, a year previously, that a recession was "a price worth paying" to get inflation down, the Tories had still managed to pull off an unlikely fourth consecutive election victory.

What can we learn from the last recession? Well, one point to note is that then, as now, the Government was prevented from rushing into interest rate cuts without a thought for inflation. Our membership of the Exchange Rate Mechanism was just as effective a brake on rate cuts then as the Bank's independence is today.

Another lesson from history lies in the policies pursued by Ken Clarke, Mr Lamont's successor at the Treasury. Despite demands for tax cuts and extra government spending to kick-start the economy – made by both unions and employers, by the way – Mr Clarke insisted he would get on top of the public finances before answering these calls. It was this prudence that laid the foundation for the 63 quarters of consecutive economic growth that have just ground to a halt – and for the approach taken by Mr Brown himself in the first half of his period in office, at least.

That the Government has in recent years abandoned this commitment to crunching down on borrowing gives Mr Darling a headache. In a couple of months' time, he will be forced to present a pre-Budget statement that dramatically revises the growth forecasts made only a few months ago – and, by definition, concede that the Government's golden rule now looks certain to be broken.

All things are relative, of course. Borrowing remains below the levels inherited by Labour in 1997, despite the austerity of Ken Clarke's chancellorship. And if commodity prices continue to fall – leaving aside the spike in the oil price in recent days caused by political tension – inflation may come down sooner than expected, enabling those all-important rate cuts.

This is the soft landing for which we all must now hope. But it is by no means guaranteed. Further political tension, for example, will add to the inflation misery caused by soaring commodity prices. And there is little sign of any end to the credit crisis, which spells gloom for our financial system. A rise in bad debt will further muddy the waters as the downturn continues. Maybe Mr Brown should make a little more of that £2 of economic growth he has delivered to each of us over the past quarter. It could be the last time on his watch that the country gets any richer.

The green shoots of an economic lull

Not everyone is doing badly. Arriva, the bus and trains company, announced a 40 per cent increase in profits yesterday. Demand for public transport is soaring across Europe as rising fuel costs force drivers to abandon their cars wherever possible.

Arriva's success is a neat reminder that economic prosperity often goes hand in hand with environmental damage. A buoyant world economy makes for increases in everything from airplane travel to polluting manufacturing to additional deforestation.

Sir Nicholas Stern said two years ago that the world needs to invest 1 per cent of global gross domestic product each year in order to avoid the worst effects of climate change, and that not doing so could result in global GDP being 20 per cent lower in future than it might otherwise be, as the cost of environmental disasters is counted.

Well, the kind of drop in economic activity we have seen in the UK over the past year is broadly equivalent to that 1 per cent. And, let's be honest, it hasn't felt too bad – indeed, without soaring inflation, most people's standard of living would have remained broadly intact.

There's no getting away from the fact that coping with climate change means changing the way we live – and in some ways accepting lower living standards, in monetary terms at least. We need to start getting used to this idea now. Maybe there's another silver lining for Mr Brown, after all.