The economy grew by 0.9 per cent in the three months to May, finally pushing just above the previous peak level, set in January 2008, according to the National Institute of Economic and Social Research (Niesr), which announced its estimate yesterday.
The finding is expected to be officially confirmed in the next GDP figures, released by the Office for National Statistics (ONS) when the first estimate for second quarter GDP is published in July.
Despite the recovery in GDP, other measures still remain well below their former levels. Since the population has increased in the same period, GDP per capita is still diminished. Niesr has previously argued that based on its projections, real wages will not make up the ground lost in recent years until around 2018, implying a lost decade for earners.
The breakdown by sector shows that while the output of services firms surpassed previous record levels in the third quarter of last year, production in the manufacturing and construction sectors remains about 1.6 and 2.6 per cent below even their 2010 levels respectively.
Economists from Investec also indicated in April that onshore GDP has probably already returned to peak levels – the negative effect of the struggling oil and gas sector has weighed against UK GDP.
The ONS yesterday also confirmed the effect of revisions to its methodology, which will make the economy appear nearly five per cent larger than previously believed. The change means that GDP is about £65bn higher than current figures show.
The new data suggest that GDP was 2.6 per cent larger in 1999, around £25bn more than thought at the time, with the gap between the previous and new estimates rising to 4.6 per cent by 2009.