The British economy is now 0.2% bigger than it was at its last peak, in the first three months of 2008.
Britain’s longest depression since serious record-keeping began is now officially over. The recovery has been driven by our service industries but we should have been expecting this as they contribute 75% of our national output.
Without a resurgence in services, there would be no prospect at all of the UK regaining the income lost in the great crash of 2007-8.
But nonetheless many will be slightly depressed that although the service economy is now just under 3% bigger than it was at the peak, manufacturing is still more than 7% smaller, and the production industries as a whole have been diminished by 11%.
There has been no rebalancing towards the people that make things for a living.
Also, within services, the contribution of shoppers to the recovery remains immense – and the retail trade made the biggest contribution to the latest quarter’s services surge.
That suggests we may be at a premature end to households’ attempts to strengthen their finances and pay down debts – and shows that growth in the economy remains perilously sensitive to the cost of money.
That said, the glass is definitely half full today.
Boom and bust
The UK is growing much faster than all the UK’s big rich competitor economies, including Germany and America.
And although it has taken us much longer to grow above the past peak than it did for the US and Germany, the original contraction in our economy was much sharper than for them – because we were so dependent on our banking sector.
Here is the measure of how and why, for the UK especially, a depression caused by a banking crisis is so much worse than other economic contractions.
We are now 25 quarters, or six years and three months, since the slump began.
After 25 quarters had elapsed from the very painful downturn of 1979, the contraction that defined the early years of Margaret Thatcher’s government, the British economy was 8% bigger than its previous peak.
And 25 quarters after the recession of 1990, caused by Nigel Lawson’s boom and bust, the UK was 16% larger than its past record level.
Today, 25 quarters on from a great crash that many blame on Gordon Brown’s complacent attitude to City regulation, the economy is more-or-less the same size as it was.
A depressing Depression.