The UK economy is finally bigger than it was before the financial crisis started six years ago, growing by 0.8 per cent between April and June, according to official data from the Office for National Statistics (ONS).
The figures show that the economy is now 0.2 per cent ahead of its pre-crisis peak, which was reached in the first quarter of 2008, and has grown 3.1 per cent since the second quarter of 2013.
The economy largely flat-lined after 2009 but sprang back to life last year and is now set to be the fastest-growing country in the G7 this year, according to the International Monetary Fund (IMF), which yesterday (24 July) upgraded its forecast for the UK for the fifth time in succession.
The ONS says that although this preliminary estimate has only 40 per cent of the data it needs to make a full assessment, revisions are “typically small” between the preliminary and third estimates of GDP.
However, the UK’s dominant service sector, which makes up almost 80 per cent of gross domestic product (GDP), is the only part of the UK economy that has passed its previous 2008 peak, expanding by one per cent in the second quarter from the previous three months, making it the fastest quarterly growth since the third quarter of 2012.
Other key sectors, including construction, industrial production and manufacturing, have yet to outstrip levels reached in 2008. In fact, the sector only inched up by 0.2 per cent between April and June, its weakest growth rate in more than a year. Meanwhile, construction actually shrank by 0.5 per cent, the first time the sector has not grown since the start of last year.
The pace of the recovery has put the Bank of England on alert that it may have to raise interest rates this year although its policymakers expect a slight slowing in the second half of 2014.