The UK economy has finally recovered. Today’s estimate by the Office for National Statistics of gross domestic product for the second quarter takes output (adjusted for inflation) to a new high, above the level of the first quarter of 2008*.
Hurrah. But, although welcome, this is nothing to celebrate. The government will not be ordering church bells to be rung. That the sum total of everything produced in the economy is only now returning to the levels of six years ago is astonishing. To give some context, the recession and recovery have lasted about nine months longer than the second world war. Read more
With the focus on today’s UK GDP numbers showing the UK is technically back in recession after the economy shrunk 0.2 percent in the first quarter, it is worth remembering another important aspect of GDP – levels.
The most recent IMF World Economic Outlook shows clearly that three of the G7 economies Japan, the UK and – more drastically – Italy have never managed to go back to pre-crisis levels of GDP.
GDP growth rebased
Why does this matter? Well it isn’t until pre-crisis levels of GDP are reached it can be meaningfully said economies have returned to some sort of normality (my colleague Keith Fray has written more about this) Read more