The UK economy grew by 0.8% in second quarter of 2014, official figures show
The figures, from the Office for National Statistics (ONS), show the economy is now 0.2% ahead of its pre-crisis peak, which was reached in the first quarter of 2008. The ONS said the economy had grown 3.1% since the second quarter of last year.
Chancellor George Osborne said: “Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan.”
But shadow chancellor, Ed Balls, said people were not feeling happier: “With GDP per head not set to recover for three more years and [with] most people still seeing their living standards squeezed this is no time for complacent claims that the economy is fixed.”
The figures are the first attempt to measure the full range of the UK’s economic activity. The ONS says that although this preliminary estimate has less than half the data it needs to make a full assessment, revisions are “typically small” between the preliminary and third estimates of GDP.
Productivity
The UK’s service sector is the only part of the UK economy that has passed its previous 2008 peak, although that accounts for the lion’s share – almost 80% – of the entire economy.
Other key sectors, including construction, industrial production and manufacturing, have yet to outstrip levels reached in 2008.
The UK economy is forecast to be the fastest growing among the G7 developed nations, according to the International Monetary Fund (IMF).
On Thursday, the IMF predicted the UK would expand by 3.2% this year, up from a previous forecast of 2.8%.
Anthony Reubens, head of statistics, BBC News
Let’s take a pinch of salt with these figures.
First of all, this is the preliminary estimate, so it’s an educated guess based on about 40% of the economic activity that will go into later estimates.
But also, in two months the ONS will revise these figures for a once-in-15-years change to the methodology.
It will change the treatment in the GDP figures of things like spending on research and development by companies and the government buying weapons.
So the trend is almost certainly right – we can say that there was considerable growth in the economy in the second quarter – but 0.8% is unlikely to be the eventual figure.
And it may turn out that we have not yet reached the 2008 peak, or indeed that we did so a while ago.
‘Marred’
Output per head is not expected to reach its pre-crisis level until 2017, partly because productivity from those in work remains weak, along with the fact the population as a whole has grown.
The news was given a muted welcome by Chris Williamson, Markit’s chief economist: “Any celebrations will of course also be marred by the fact that the milestone reminds us that it has taken some six years for the country to merely regain the economic might it had before the financial crisis struck.”
Other countries recovered the output lost to the crisis much earlier than the UK. Germany regained its peak in 2010, with the US and France following a year later.
Set against that are changes due to be made to the way the ONS calculates its figures, which will be brought in in September. These may show the economy was actually stronger in 2008 than had been thought, and therefore the ground was made up sooner.
[BBC News]
