UK economy bounces back to pre-recession levels
UK economy grew by 0.8% in second quarter but fears remain about economy's reliance on consumer spending
The UK economy has surpassed its pre-recession peak after growing 0.8 per cent in the second quarter.
This means the economy is finally back above levels seen in the first quarter of 2008 before the financial crisis began and plunged Britain's economy into its longest and deepest recession in decades.
In addition, the Office for National Statistics (ONS) said the economy had grown 3.1 per cent since the second quarter of last year and it is now 0.2 per cent bigger than it was before the crisis.
Reacting to the figures, George Osborne thanked "the hard work of the British people" while David Cameron described the news as "encouraging" and a "major milestone" for the UK. However, Ed Balls, the shadow chancellor, said British people are yet to benefit from a real recovery.
He added: "With GDP per head not set to recover for three more years and most people still seeing their living standards squeezed this is no time for complacent claims that the economy is fixed."
The shadow chancellor also pointed out that it has taken six years for the Coalition to get the economy back to where it was before the crisis started with wage growth continuously lagging behind inflation.
The increase was mostly driven by the services sector, which accounts for three-quarters of output, while expansion in the manufacturing sector fell to just 0.2 per cent and construction shrank by 0.5 per cent, dashing hopes for a re-balancing in the recovery away from its reliance on consumer spending.
"The only real criticism that can be made of the second quarter growth performance was that it was lopsided on the output side," said Howard Archer, chief UK economist at IHS Global Insight.
We owe it to hardworking taxpayers not to repeat the mistakes of the past &instead work through the plan that's delivering economic security— George Osborne (@George_Osborne) July 25, 2014
Economy grew by 0.8%. Thanks to the hard work of the British people, today we reach a major milestone in our #LongTermEconomicPlan— George Osborne (@George_Osborne) July 25, 2014
It's encouraging news that the economy is larger than pre-crash levels. Our Long Term Economic Plan is working & this is a major milestone.— David Cameron (@David_Cameron) July 25, 2014
GDP per head not set to recover for 3 more yrs so it's no time for complacent claims that our economy is fixed http://t.co/urfJDaWmM9— Ed Balls (@edballsmp) July 25, 2014
The ONS figures come just a day after the International Monetary Fund (IMF) revised its growth forecast for the UK economy this year to 3.2 per cent, up from 2.8 per cent in April.
This is the fourth time in a row the IMF has upgraded the UK. Its latest estimate would make Britain the fastest- growing advanced economy in the world this year.
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