Cast your mind back a little over three months to late April. It was still winter and there was a distinct possibility that the preliminary UK Gross Domestic Product (GDP) for the first three months of 2013 would show the economy shrinking for a second successive quarter, creating a “triple dip” recession. However, the GDP figures issued by the Office for National Statistics (ONS) on 25 April confounded the pessimists and showed growth of 0.3%.
Two months later, the ONS revised some 2012 statistics, stating that the first quarter of last year had seen no growth, rather than the 0.1% contraction of previous calculations. That meant there were not the two consecutive quarters of shrinkage that are the ingredients of a recession, and hence even the “double dip” recession also disappeared.
In July there was a third round of good news, with preliminary figures for the second quarter suggesting that the UK economy had grown by 0.6%. This was faster than the Office for Budget Responsibility (OBR) was expecting and points to a rarity in future OBR forecasts; an upgrading to growth numbers.
These signs indicate an economy on the mend, but there is a long way to go. As the graph below shows, the overall output of UK plc is still over 3% below the peak set in the first quarter of 2008 and at much the same level as at the end of 2006.
The gap between where we are now and where we might have been in the GDP growth line before the financial crisis in 2008, is one measure of how much the downturn has cost the economy. On a more optimistic note, it also suggests plenty of scope for future growth.