The picture you need to look at today regarding the UK economy is the revision to the level of real gross domestic product. The recession was deeper than thought, so the distance Britain needs to travel to regain the 2008 peak is correspondingly higher. Compared with the 1997 to 2008 average, output is now 17.7 per cent below that line.
The chart shows the old and new real GDP levels rebased to 1997 Q1. As is immediately obvious, the main revision is to the extent of the recession and the recovery looks similarly weak. The “double-dip” has been eliminated, but this is a side-show.
If you look at a nominal GDP chart on the same basis, you see this. Since there have been upward nominal GDP levels revisions and downward real GDP revisions, the revisions reflect a big change in in the deflators (estimated inflation) – specifically an upward revision to the estimate of inflation in investment goods. This means for example that real investment in 2009 is now estimated to have fallen by 16.7% not 13.7%.