The economy is now, at last, larger than its pre-recession peak. The coalition parties are keen to claim vindication this morning. Nick Clegg has declared that ‘The rescue has worked’ and used today’s numbers to justify the Liberal Democrat’s decision to go into coalition. While George Osborne is celebrating a ‘major milestone in our long term economic plan’. But he’s also keen to warn that ‘there is still a long way to go’ and to emphasise that ‘the mistakes of the past’ must not be repeated. In other words, don’t let Labour back in.
Political symbolism aside, GDP is still lower in per capita terms today than it was before the recession. It is also, as the FT’s Chris Giles points out, only services which have fully recovered their lost output.
But it is only services which have fully recovered lost output pic.twitter.com/MVKsVCytkD
— Chris Giles (@ChrisGiles_) July 25, 2014
Having said this, the economy has grown by 3.1 per cent in the past 12 months—a good clip in anyone’s book. The big political question now is whether voters begin to feel this growth. The private sector pay rounds coming this autumn will tell us a lot about whether there’ll be any kind of feel good factor by next May