The latest data from the Office for National Statistics estimates the UK’s Gross Domestic Product (GDP) grew 0.6 percent sequentially in the second quarter, and have predictably been jumped on by both the Conservatives and Labour.
The biggest contribution to GDP was the services industry, growing 0.6 percent or 0.48 percentage points to the 0.6 percent increase. Productive industries also grew with a contribution of 0.08 percentage points, as manufacturing increased 0.4 percent after negative growth in the first quarter. However, all of these industries are well below their pre-crash levels.
The GDP growth, the ONS says, now puts the UK at 3.3 percent below the peak in Q1 2008, before the worldwide economic crash.
The growth was expected by the market and did not affect the London Stock Exchange, the BBC reports.
GDP was growing steadily between 2000 and early 2008 before the financial market crashed. Services continued to grow but production was largely flat, although construction was experiencing a boom at the beginning of the decade. The 2008 crash had an effect on all industries, particularly construction and production.
Economic growth did pick up late 2009 but at a far slower rate than prior to the crash. The crisis in the Eurozone swelled in 2010 creating further economic uncertainties and slowed growth again. According to ONS data, because construction and production has only managed to approach 2009 levels, GDP growth since then is attributable to services instead.
Although GDP growth has been welcomed, it does not necessarily translate into standards of living in real terms, and has its own set of criticisms as a measure of economic wellness.
Shadow chancellor Ed Balls said “families on middle and low incomes are still not seeing any recovery in their living standards,” noting that wages have not risen with prices. Coalition chancellor George Osborne admitted “things are still tough for families”.
The creeping growth – nowhere near pre-2008 levels and after years of remaining flat – is terrifically vulnerable in a very uncertain global economy.
It’s not time to put the Tesco Value Cava on ice just yet: EU countries are increasingly volatile, austerity policies are being demanded all across the world, shocks to the markets could happen at any moment and in private industry, the prevailing attitude is one of caution.