OPINION:IT'S OFFICIAL. We are sort of in recession. It just depends on whether you want to bravely embrace the GDP numbers or hide behind the skirts of the GNP numbers, writes John McManus

According to the former, we have had two-quarters of economic contraction - the definition of a recession - while the later says the economy only started shrinking in April.

But even if you choose to hang onto the GNP numbers, there really is no where to hide, because most economists are firmly of the view that, whatever measure you choose, the economy contracted in the third quarter which limps to an end tomorrow. We will not see those numbers until Christmas.

The case for embracing recession now is compelling. And it's to the Government's credit that it has done so, not that there is much of a choice.

As with any statistics, growth figures don't change anything. But the numbers do help people get their heads around the scale of the problem, which has yet to fully hit home for many.

It also gives the Government a mandate for a tough budget and radical action if it so chooses. It will also give it the cover it needs to breach the terms of the EU Stability and Growth Pact, which puts a ceiling on the amount the Government can borrow under normal circumstances. However, whatever crimes we commit will be dwarfed by the actions of the French and Italians.

The scene is also set for a budget that will provide a significant fiscal stimulus should the Government choose to do so. And there are no shortage of proposals as to how it could be administered, ranging from tax cuts for the middle classes to inevitable calls for measures to help first-time home buyers.

It remains to be seen whether the Government has the appetite for radical measures. The Taoiseach's enthusiasm for acknowledging the recession during his recent trip to New York could be seen as a sign that he is up for it. However, all the signals yesterday were to the contrary. The picture now emerging is that the emphasis in the budget will be firmly on cutting costs and borrowing the minimum needed.

The Government's new-found enthusiasm for talking down the economy seems to have more to do with getting the public ready for very unpleasant news rather than the need for drastic measures. As the Cabinet met yesterday for a special meeting on the budget, the air was thick with talk of proposed cuts and savings, each more unpleasant than the next - taking medical cards off pensioners, means-testing child benefit, possible tax increases etc.

In tandem with all this fevered speculation, the Government is clearly letting it be known that the September exchequer returns will be a fright. Without a doubt, the ground is being prepared for a very unpleasant budget. But the Government's problem is that the more Ministers go on about the scale of the problem, the more inadequate the response appears.

There is little on the table so far that falls outside the boundaries of good housekeeping. It could almost be argued that the Government - or more likely the Department of Finance - is taking advantage of the current climate to tidy up a few fiscal mistakes, such as medical cards for everybody over 70. It also looks like they have grabbed a once-in-a-lifetime chance to try and get rid of a few civil servants.

Anything that has emerged about the Government's thinking on what you might call the "big ticket" items seems much more prosaic. Hold off on indexing tax allowances and postpone a few big, big projects: a bit of nip and tuck.

The caution is understandable - it's very hard to get a true picture of the economy.

The GDP-versus-GNP-figures debate may seem a bit academic, but at the same time it highlights the problem. Any temptation that the Cabinet might have to engage in a bit of Keynesian fiscal stimulation is also likely to be resisted by the Department of Finance, which remembers the last time a government tried to spend its way out of trouble.

As a result, it's hard to see the coming budget as being anything other than a belt-tightening exercise. The question is whether, given what is going on globally, it's really the time to be brave.