The UK economy has been much stronger since 2008 than previously thought, the Office for National Statistics revealed yesterday as it tore up the previous official version of events.
With a shallower recession in 2008-09 and more rapid recovery since, the UK's overall performance compares favourably with other G7 countries and eliminates a significant element of the recent concern over weak productivity.
The revisions – which include data up to the end of 2012 – will add to the dilemma facing the Bank of England as it prepares to set interest rates this week.
The stronger performance of the economy will embolden the two Monetary Policy Committee members who want to raise rates that the economy can withstand a rise. But more dovish members will argue that improved productivity suggests the economy can grow more without generating inflationary pressure and these revisions tell us little about the prospects for the future.
The ONS is introducing once-in-a-generation changes to the national accounts, which include the headline gross domestic product measure, later this month and is in the middle of drip-feeding the results of its work to improve the national accounts.
In yesterday’s publication, the statistical office published revised real and nominal GDP for 2010 to 2012 and a historical series back to 1997.
The revisions reflect a combination of changes the ONS was compelled to introduce to bring the UK’s national accounts into line with new international standards, new estimates of the contributions of the charitable sector, the sex industry and illegal drugs and the annual process of looking at all the information about more recent years and considering again the likely growth of the economy.
– (Copyright The Financial Times Limited 2014)
