Macroeconomic policy Failing to plan = planning to fail The risk of recessions and the importance of macroeconomic policy in limiting the damage they cause 14 July 2019 James Smith There is a relatively high risk that the UK will experience a recession in the next few years. An important question, then, is how much of a priority we should make preparing for it? That depends on the impact recessions have. This briefing note argues that recessions lead to significant and lasting damage, with mass unemployment and a large hit to living standards. Macroeconomic policy plays a vital role in preventing recessions in the first place, but is even more important when it comes to limiting their damage. So it is a big concern that the legacy of the crisis will limit the ability of policy to support the economy when the next recession hits. This briefing note sets the scene for the launch paper of the Resolution Foundation’s new Macroeconomic Policy Unit. That paper will assess the framework for using macroeconomic policy to support the economy in the next recession.