The economy has finally clawed its way back to pre-recession levels according to the National Institute of Economic and Social Research (NIESR), having grown by 0.9 per cent in the three months to May.
The think tank calculates that the 0.9 per cent growth for the second quarter combined with 1.1 per cent in the three months to April will have taken GDP 0.2 per cent above where it was in January 2008.
NIESR’s findings are expected to be officially confirmed in the next gross domestic product (GDP) figures released by the Office for National Statistics (ONS) in July, when it publishes is first estimate for the second quarter.
However, the think tank also found that, while GDP has recovered, other measures, such as real wages, still remain well below their former levels, with no return to their 2009 high until 2018, and, since the population has increased in the same period, GDP per capita is still diminished and probably won’t recover fully until 2017.
The breakdown by sector shows that while the output of services firms surpassed previous record levels in the third quarter of last year, production in the manufacturing and construction sectors remains about 1.6 and 2.6 per cent below even their 2010 levels respectively, although industrial production increased by 3 per cent in April on a year-on-year basis.
In addition, a spokesman for NIESR said that although consumers initially fuelled growth, there is now some rebalancing towards investment activity as well.
The ONS yesterday (June 10) also confirmed the effect of revisions to its methodology, which will make the economy appear nearly 5 per cent larger than previously believed. The change means that GDP is already around £65bn higher than current figures show.