London’s blue chip index hit a 14-year high yesterday amongst news that Britain’s recovery from the Great Recession was stronger and faster than previously thought, official figures have shown.
The Office for National Statistics (ONS) rewrote economic history on Wednesday when it published revised growth estimates that showed the economy shrank by 6% in the period between 2010 and 2012, not by 7.2% as was previously thought.
This means that the rate of recovery is actually higher and much closer to other G7 nations – making the bounce back of the recent recession stronger than that following the recession in the late seventies.
Assuming that growth rates from 2013 remain unchanged, the economy surpassed its pre-recession peak in the third quarter of 2013, not in the second quarter of this year. This also means that output stands 2.7% above the pre-crash high, compared to the 0.2% previously thought.
The Confederation of Business Industry (CBI) expects the British economy to grow by another 3% this year and 2.7% in 2015. It said the ONS’ revisions help to “shed some light on the productivity puzzle”, which is now somewhat understood due to the upward revision to output.
John Cridland, the CBI’s director general, said:
“As companies begin to invest more, they will change working practices and make people more productive,” he said. “As the companies become more profitable, they will share that benefit with their workforces because of skill shortages and greater labour mobility as the recovery strengthens.”
He concluded that rising business investment would help to trigger a rise in productivity and real wage growth.
Photo by Nana B Ageyi