UK economy back at pre-crisis level
- 25 July 2014
- From the section Business
The UK economy has returned to pre-crisis levels by expanding 0.8% in the second quarter of this year.
On an annual basis gross domestic product (GDP) expanded by 3.1%.
The figures show the economy is now worth 0.2% more than it was at its peak in 2008, the Office for National Statistics (ONS) said.
The service sector is the only part of the economy that has passed its previous 2008 peak, although that accounts for almost 80% of UK output.
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%.
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."
Analysis: Anthony Reuben, BBC head of statistics
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.
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.