The Office for National Statistics (ONS) has revised UK economic growth up to 0.9% for the second quarter of the year compared with a previous estimate of 0.8%.
Compared with a year earlier, UK GDP was 3.2% higher in the second quarter.
The UK economy grew faster than estimated, extending a recovery that’s been more hardy than previously thought.
Revised ONS figures show the UK economy surpassed its pre-recession peak in the third quarter of 2013. Previously, this was thought to have been achieved in the second quarter of 2014.
The ONS are now including a new methodology for calculating gross domestic product (GDP), which will include factors of spending more on research and development, as well as the economic contribution made by drug dealers and prostitutes.
GDP was 2.7% higher than its pre-crisis peak by the end of the second quarter this year, the ONS has estimated. However, the ONS also revised its estimate of growth in the first quarter of the year down to 0.7% from an earlier estimate of 0.8%.
Compared with a previous estimate of zero growth, the contribution from construction was revised up sharply to show 0.7%.
The ONS’s figures have demonstrated that business confidence is continuing to strengthen.
Business investment grew 11% in the second quarter compared with the same period last year. However, despite economic growth, the current account deficit, which measures how much a country imports exceed the value of its exports – increased from 4.7% of GDP in the first quarter of 2014 to 5.2% in the second quarter.
Ms Lee Hopley, chief economist at EEF says: “ONS hasn’t quite rewritten history, but the accounting changes put the UK’s recent economic performance in a rather better light. Most notably we hit our pre-recession output peak sooner than first thought and the composition of growth has struck a better balance between investment and consumption with a bigger bounce in business investment since the end of the recession.
“Manufacturing has been a strong contributor to these recent trends. Output growth in the first half of 2014 was more robust than previous estimates leaving the climb back to pre-recession levels less challenging that we thought just a few months ago. New data on investment trends across the sector also point to manufacturers’ investment plans coming back on stream at a fairly rapid pace with growth continuing through 2014 so far. This seems more in line with survey evidence on firms’ intentions to invest.
“While the strengthening data should be encouraging for policy makers, it still leaves some tricky questions about pay, productivity and public finances on the table.”