Where is the UK Economy? National Output

The first of an occasional series - putting economic data into context. First we focus on the level of real national output in the UK in the aftermath of the recession and with recovery appearently grinding to a halt.

UK GDP remains well below the peak of national output at the end of the last cycle in the early months of 2008. During the recession, national output fell by a cumulative 7 per cent. Since then there has been a slow and uncertain recovery and the Bank of England has recently slashed their growth forecasts for the remainder of 2011 and for 2012. Growth of less than 1 per cent will cause unemployment to rise and will damage business and consumer confidence (animal spirits) and further undermine planned capital investment spending.

There is a real danger than UK trend economic growth (the estimated annual growth of potential GDP) will continue to edge lower affecting living standards and any chance of the government meeting its medium term deficit reduction targets.

Bank of England: Bank of England finds risk of crisis biggest since 2008