So beware of the agenda when you see headlines like these:-
UK economy finally returns to pre-crisis level
Second quarter GDP growth of 0.8pc means total economic output was 0.2pc points bigger than in the first quarter of 2008, its previous peak
Britain's economy is now bigger than it was at its pre-financial crisis peak, after official data showed gross domestic product increased by 0.8pc in the second quarter of the year.
The growth was driven by the dominant services sector – which accounts for almost four-fifths of the British economy – and was 1pc larger in the quarter compared with the same period last year, according to the Office for National Statistics.
Output in the production sector, which accounts for about 15pc of the economy, rose by 0.4pc. However, output in construction – 6pc of the British economy – contracted by 0.5pc over the period, and agriculture – less than 1pc of the economy, fell 0.2pc.
The overall growth – which was widely predicted – means the UK economy is now 0.2pc bigger than its previous peak, which was hit in the first three months of 2008. On an annual basis, GDP rose by 3.1pc in the quarter, the fastest pace of growth since late 2007.
The size of the contraction from peak to the trough in 2009 was 7.2pc.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “Given that it has taken more than six years for the economy to get ahead of where it was in 2008 and the economy is still only 0.2pc larger, any celebrations should be qualified... but at least we can finally celebrate this fact.”
He added that there was some concern that the growth was driven by the services sector, despite the Government's drive to "rebalance" the economy towards manufacturing.
Britain's dominant services sector powers more than three-quarters of the UK economy.
However, Britain’s economy could well have grown past its previous peak several months ago, according to Peter Spencer, chief economic adviser to the EY ITEM Club. He pointed out that revisions to the methodology by which GDP is measured that are due out in September – such as taking items from the “black economy” such as prostitution and drug dealing – could show “we sailed past the previous peak long before”.
Joe Grice, chief economic adviser at the ONS, said: “The economy has now shown significant growth in six consecutive quarters and the long climb back to the pre-crisis peak of 2008 has at last been completed. It is worth noting, however, that changes this autumn to the way countries measure their GDPs may yet modify our view of how slow the UK’s recovery has been.”
Although Britain’s economy is now powering ahead – on Thursday the International Monetary Fund upgraded its forecast for the UK, predicting growth in 2014 will 3.2pc this year, an increase of 0.4 points that takes Britain ahead of all other developed nations – it has taken a long time to reach this point.
“It has been a long slog, with the UK the second to last member of the G7 group of economies to reach the milestone and taking much longer to rebound than in past recessions,” said Guy Ellision, of head of UK equities at Investec Wealth & Investment.
Germany passed its pre-crisis peak in 2010 and France and the US followed the next year. The slow pace of Britain's recovery from the crisis is partly because of the size of its banking sector, which took a huge hit in the financial crisis. But critics of the government say it is also because finance minister George Osborne opted for sharp curbs on public spending to rein in the country’s large budget deficit.
The British Chambers of Commerce also sounded a cautious note, warning that growth cannot be taken for granted.
“The fact that Britain’s economy is now bigger than it was in 2008 is great news, and will provide a shot in the arm for businesses and consumers alike,” said John Longworth, the organisation’s director-general. “Yet even though we’re one of the fastest-growing developed economies, there’s no room for complacency.
“Without sustained action, these growth figures could be ‘as good as it gets’ for the UK. The Government and the Bank of England must pull out all the stops to encourage business investment, help exporters and get finance flowing to growing firms who still aren’t seen as a safe bet by the banks.”
He added that he wanted to see interest rates stay low for as long as possible and when they do go up to rise “slowly and predictably” to avoid “undermining the solid business confidence that’s driving growth”.
However, some economics commentators warned that the consumer and business spending that is driving the growth could cause rates to rise.
“The GDP figures mark a concrete expansion of the UK economy to surpass pre-crisis levels and we expect upwards revisions to the data in the coming months,” said Gautam Batra, investment strategist at Signia Wealth. “A pick up in investment spending combined with strong consumer spending will no doubt put further pressure on the MPC to consider rate increases sooner rather than later.”
GDP per person is only expected to return to pre-crisis levels in 2017, reflecting growth in the population and the country's stubbornly weak productivity since 2008, according to Britain’s independent budget forecasters.