Is UK GDP set to pass its pre-crisis peak?
Today's growth figures may have disappointed analyst expectations, but could signal that we're finally closing in on peak activity.
Economic activity, measured by real GDP, collapsed in 2008. Since then, we've been waiting for the economy to return to that pre-crisis peak.
The Office for National Statistics' latest GDP estimate sees the economy 0.6 per cent below that level at the end of the first quarter. Now in late April, is it possible that (by this measure) the UK's economy has finally seen a recovery?
Bank of England governor Mark Carney might be of that opinion. In an interview with the Bristol Post, published today, he told the paper that he believes the economy is now at where it was back in 2008 – although it's not clear that he's referring to real GDP.
GDP data is published as a quarterly, rather than monthly, series. So working out where activity is now can be a tricky business. Scott Corfe, managing economist at the Centre for Economics and Business Research, says that a lot of business surveys and other leading indicators "suggest that it’s quite possible that we’re back at or on the cusp of exceeding the pre-crisis peak at the moment."
Howard Archer, chief European and UK economist at IHS Global Insight, thinks we'll most likely get back to that pre-crisis peak in June, but it could happen in May. By that reckoning, while we may not be there already, we're certainly not far off.
If you look at the onshore economy alone – excluding oil and gas – then the pre-crisis peak has already been passed. Philip Shaw of Investec says that ignoring those offshore components, real GDP made it back to peak during the first quarter of this year.
Elsewhere, other economic indicators are also positive. Latest estimates sees inflation at a four and a half year low, wage growth seems to be returning, and unemployment is now below seven per cent for the first time in more than five years.
If real GDP has recovered – then it's certainly taken a while. The US and Germany were back at their 2008 levels years ago. A new BofA Merrill Lynch Global Research report notes that on this measure, the UK climbed ahead of the Eurozone around a year ago, but is still behind France.
