Britain’s unreal recovery

That politicians concern themselves with the salability of policies, as well as their efficacy, is nothing new. It’s quite a depressing thought, but perhaps this is an inevitable by-product of democracy. Yet the short-termism replete in the coalition’s government economic strategies has surely broken new ground in this regard. The government has facilitated, at long last, a return to strong growth. But they have done so by ramping up the economic growth model that served Labour so well until 2008 – a model George Osborne had promised to dismantle.

The pace of growth evident in the UK economy is impressive. Of course, the economy is still growing below the pre-crisis trend, and the pace seems to have declined slightly in recent months, but after several years of stagnation, almost 2 per cent growth in GDP in 2013 is not to be sniffed at.

We should be wary, of course, of confusing levels and rates. Generally speaking, weak growth from a higher base trumps strong growth from a low base. The UK economy has still not attained the level of output reached before the recession; by this stage of the recovery after the most recent recession in the UK, in 1990, output was already 13 percent above its pre-recession peak. Output was 7 per cent above the pre-recession peak at this stage after the early 1970s downturn, and even after the Great Depression in the early 1930s output was 6 per cent above peak by this stage.

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Image: HM Treasury