Welcome to the pseudo-recovery

The second estimate of GDP for the third quarter of 2013, published by the ONS this week, appears to confirm that the UK economy has returned to consistent growth. Yet the detailed breakdown of investment results paints an alarming picture of an unbalanced economy. Growth remains far too dependent on private consumption.

Not only have the constituent elements of growth failed to rebalance in favour of investment, gross fixed capital formation is actually around 25 per cent below its pre-crisis peak in late 2007. It now represents 10.4 per cent of GDP, compared to a G7 average of around 15 per cent.

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Image: Philip Taylor PT