The UK economy is finally expected to emerge from a six-year downturn when official figures today show gross domestic product (GDP) has recovered to pre-recession levels.
GDP is expected to have grown by 0.8 per cent in the second quarter of the year, maintaining the pace of the first three months. Growth in the first quarter had left the economy just 0.6 per cent off its previous peak of early 2008.
Paul Hollingsworth, of Capital Economics, said the expected rise for the latest period would leave output 0.2 per cent ahead of this level, which “would mark another milestone for the recovery”.
The figures from the Office for National Statistics (ONS) will mark the UK’s recovery from the deepest downturn in post-war history as GDP fell by 7.2 per cent from the first quarter of 2008 to the second quarter of 2009.
Recovery has been slower than it had been following previous recessions, but growth began accelerating last year and Britain is forecast to be the fastest growing major economy in 2014.
The latest forecast from EY ITEM Club predicts a 3.1 per cent expansion for this year, a stark contrast with last summer when despite early signs of a pick-up, the outlook remained uncertain.
Confirmation that GDP has returned to pre-recession levels is likely to be seized upon by the coalition as a sign that its economic policies are working.
However, Labour critics point to evidence that it is not yet filtering through to ordinary households as real terms pay is still falling.
Latest figures show while employment levels are improving strongly, pay growth has fallen to just 0.3 per cent, lagging well behind inflation at 1.9 per cent.
The new GDP figures are also likely to be picked over for their implications for the timing of an interest rate rise.
Alan Clarke of Scotiabank said a lower-than- expected quarterly growth figure was likely to lessen expectations of this happening by the end of this year.