The UK economy registered its fifth successive quarter of growth in the opening quarter of 2014 but remains below its pre-recession peak, official estimates showed today.
The Office for National Statistics said output rose 0.8 per cent between January and March - slightly below the hopes of forecasters who had pencilled in a 0.9 per cent advance and the Bank of England, which was expecting 1 per cent growth.
But the ONS added that the economy still languished 0.6 per cent below its peak in the first quarter of 2008 six years on from the start of the recession. From peak to trough in 2009, the economy shrank 7.2 per cent.
The main growth driver was the UK’s dominant services industry, which accounts for around three-quarters of the economy’s output. But manufacturing grew by 1.3 per cent - its strongest quarter for nearly four years - bolstering hopes for a re-balancing in the recovery away from its reliance on consumer spending.
The Bank of England has held interest rates at record lows of 0.5 per cent since March 2009 to support the recovery as well as pumping £375bn into the economy via quantitative easing. Signs of rapid recovery in the housing market have raised concerns over a new bubble emerging but inflation has fallen to four years lows of 1.6 per cent, giving the Bank breathing space to keep rates low.
Jonathan Loynes, chief European economist at Capital Economics, said: “For now at least the figures point to a “Goldilocks” scenario of solid, but not excessive, growth which should allow both inflation and interest rates to remain at low levels for some time yet.”
Chancellor George Osborne said: “The impact of the Great Recession is still being felt, but the foundations for a broad based recovery are now in place.”
But union leaders pointed to the continuing squeeze on salaries after years of inflation running ahead of earnings. Paul Kenny, GMB general secretary, said: “‘Onwards and upwards’ will be the response of politicians and commentators to the latest GDP figures. Meanwhile back in the real world people know that while the recovery underway is welcome we have a very long way to go to climb out of the hole caused by the recession.”