Official Figures Show Economy Bigger Than In 2008

New data has confirmed that Britain's gross domestic product (GDP) is finally larger than it was before the recession began in 2008.

The first estimate by the Office for National Statistics for the second quarter of 2014 indicated that the economy expanded by 0.8 per cent.

It is the second consecutive increase of 0.8 per cent quarter-on-quarter and it means the UK economy is now 0.2 per cent larger than it was in the second quarter of 2008, which was the prelude to six successive quarters of decline, reducing output by 7.2 per cent.

SMEs will have good reason for cheer as it indicates the economy is continuing on a healthy upward path. Indeed, output is now 3.1 per cent more than a year ago.

Those involved in the services sector will have the greatest reason to be upbeat, as quarterly output in this part of the economy was estimated to have jumped by one per cent.

Production was also up by 0.4 per cent, but there were dips in construction and agriculture, by 0.5 per cent and 0.2 per cent respectively.

While the figure is subject to revision as more information becomes available, the last quarter saw the initial growth figure being confirmed by the second and third estimates.

Commenting on the situation and reflecting on the prospects for further expansion, European economist at asset management firm Schroders Azad Zangana said: "Overall, [it was] another strong quarterly performance for the UK as signalled by business surveys. The International Monetary Fund's recent forecast upgrade for UK GDP puts it as one of the best performers in the G7 for this year.

"While we expect a slight slowdown in growth in the second half of the year, the strong momentum that has been built should help broaden out the economic recovery further."

He added that there may be good reason for the Bank of England to raise the base rate soon as economic slack is used up, but said a continuing fall in real-terms earnings provided good reasons for them to take a wary approach.

Expert Opinion

News of these improvements in the economy is very welcome and it marks an important step forward for business in general. <br/> <br/>"With everything continuing to move in the right direction, it is safe to say that small businesses which have either formed recently or ridden out the difficulties seen in recent years will be confident regarding their future opportunities. <br/> <br/>"While plenty of research has shown SMEs are already thinking about their next steps, we would encourage those who have perhaps been more cautious to ensure they speak to a range of experts as they continue to plot the next move to develop their offering. They must ensure legal advisers are in the mix, as they will prove invaluable in ensuring that everything complies with the relevant regulations." Fergal Dowling - Partner