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New data point to firmer economic growth in UK
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BRITAIN’S economy has grown at a stronger rate than previously estimated over the last few years, according to new figures that could be a boon for Britain’s government ahead of elections next year.
The Office for National Statistics is revamping how it calculates the size of Britain’s economy, and yesterday published new estimates of gross domestic product from 1998 to 2012.
The revisions, which reflect European Union-wide changes to national accounts, show the economy grew more strongly than thought in the years after Britain’s coalition government came to power in 2010.
The ONS now estimates the economy grew 1.6 percent in 2011 compared with its previous estimate of 1.1 percent. In 2012, the economy grew 0.7 percent, against 0.3 percent previously.
The finance ministry said the new figures could mean the economy was now around 2.7 percent larger than its pre-financial crisis peak, instead of the 0.2 percent currently estimated.
“These ONS revisions show an economy that has been growing more strongly than previously thought, with almost every quarter under this government being revised upward,” said a ministry spokesman.
The economy is the key battleground ahead of next May’s general election.
The Conservative Party hopes the strength of the recovery will persuade voters to return them to power, but opposition Labour — ahead in the polls — says most Britons have felt little benefit from the upturn.
The ONS said the broad picture since 1998 had not changed much because of the revisions.
“Although the (2008-09) downturn was less deep than previously estimated and subsequent growth stronger, it remains the case that the UK experienced the deepest recession since ONS records began in 1948 and the subsequent recovery has been unusually slow,” said Joe Grice, the ONS chief economist.
The revisions reflect EU-wide changes in what is considered the best way to represent the size of the economy — for example, by treating corporate research as output rather than a cost. They also include more eye-catching changes, such as estimates of the activity of prostitutes and drug dealers.
Michael Saunders, chief UK economist at Citi, said the revisions were not just of historic interest because they probably suggest the economy has more momentum than Bank of England policy-makers believe.
He said the BOE’s Monetary Policy Committee is more likely to hike earlier rather than later.
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