GDP finally tops 2008 peak, says NIESR
Britain's economy has finally recovered the ground it lost in the 2008-09 recession, according to the National Institute of Economic and Social Research.
NIESR calculates that GDP grew by 0.9 per cent in the three months to May, following 1.1 per cent in the three months to April. The think-tank calculates this took GDP 0.2 per cent above where it was in January 2008.
The most recent official figures, from the first quarter of 2014, showed GDP still 0.6 per cent below the peak. Next month's official estimate for the second quarter of 2014 is widely expected to show the 2008 peak being surpassed.
Britain's manufacturers reinforced that sense of momentum as official figures showed factories producing goods in April at the fastest annual pace for three years. Production bounced back from a weaker March to rise by 0.4 per cent, leaving the annual pace of growth at 4.4 per cent - the biggest rise since January 2011.
Although manufacturing remains 7 per cent below its pre-crisis peak, the revival over the past year has been driven by an 18 per cent surge in output from plastics and rubber industries since last April, the largest increase for more than 40 years.
The improving fortunes of the manufacturing sector - even in the face of a stronger pound - will ease concerns over a recovery largely based on consumer demand and housing, and will raise hopes that businesses will step up investment despite a weak trade performance.
Chris Williamson, the chief economist at the financial data provider Markit, said manufacturers were enjoying their best spell of growth for four years. “The official and survey data also help to dispel the notion that the recovery is based purely on consumer credit and the housing market, but is instead being fuelled to a large extent by booming factories and industry,” he said. “This so-called 'rebalancing' means the recovery is looking increasingly sustainable.”
Overall industrial production - which includes mining and oil and gas extraction - grew 0.4 per cent on the month, the ONS said.
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