The British economy is nearing the level it reached at its pre-recession peak, with an arrival time in the next month not out the realms of possibility, one of the countryís leading research firms has argued.
The NIESR has identified that as of May this year, the UKís total output has risen so that it is now just 0.17% away from the point it was at during the first quarter of 2008, taking the country closer to the landmark moment is has sought for almost 6 years now.
Britain is currently the only member of the G7 leading developed economies other than Italy that is yet to reach its pre-recession levels, with the USA, Germany and Canada getting there in 2011, France narrowly meeting the target at the end of 2013, and Japan set to announce their return to their pre-recession peak later this week.
And the news that the countryís economy is on the brink of finally reaching its pre-recession peak, just weeks after the IMF forecasted that Britain would have the fastest growing economy this year of all the G7 group, will be a huge boost to the election hopes of Prime Minister David Cameron and Chancellor George Osborne.
There was also positive news on the countryís manufacturing performance in the first three months of 2014, with figures from the Office for National Statistics (ONS) indicating that total output rose by 1.4%, representing the quickest rate of growth in the sector since 2010.
ëThe march of the makers continuesí
The National Institute of Economic and Social Research (NIESR) has estimated that the UK will reach the peak it was at during the first three months of 2008 by the end of June, with economic forecasters expecting a strong performance from the UK in the second quarter of this year as the manufacturing sector continues to flourish and boom.
“It can reasonably be expected that the peak will be regained within the next month or so,” NIESR said.
The impressive performance in the manufacturing industry has been forwarded as a huge reason for why the countryís economy is improving so quickly, with ONS figures indicating that a 7.3% rise in the output of rubber and plastics heavily contributed toward the overall 1.4% rise in output during the first three months of this year.
Food, drink, tobacco, machinery and equipment production have also been identified as primary contributors toward the UKís economic growth, with output expected to hold strong for the remainder of the year.
Martin Beck, senior economic adviser to the EY ITEM Club, said: “The ‘march of the makers’ continues.”
He argued that due to the overwhelmingly positive nature of recent manufacturing surveys conducted in April that the next quarter appears to be “set fair for further strong growth in the manufacturing sector”.
As well releasing positive figures on the manufacturing sector, the ONS also unveiled separate data that indicated that output in the construction industry had raised by 0.6% in the first quarter of this year, as the countryís economic recovery begins to achieve the much-needed balance that it is necessary for its long term prosper.
The NIESR also upgraded its initial growth forecast for the British economy this year to 2.9%, representing a considerable rise from its previous forecast of 2.5%.
It also raised its growth forecast for next year to 2.4%, up from 2.1%, and estimated that it will hold at this level until at least the end of 2016.
Long way to go
The ONS also identified that the British trade deficit dropped to £1.3 billion in March, as the countryís economic recovery continues to have a positive effect on its exports.
The ONS figures revealed that exports rose by 4.9% in March compared to the month before, whilst imports increased by 2.8% during the same period.
However, David Kern, chief economist at the British Chambers of Commerce, has argued that whilst the figures indicated a substantial improvement in the month between February and March that nevertheless the overall trade deficit for the first three months of 2014 was only slightly lower than it was in the final quarter of 2013.
“While there are signs of a small improvement in the UK’s international trade performance over time, the pace of change is still painfully slow,” Mr Kern said.
Nevertheless, the data does clearly illustrate that the economy is moving in the right direction, as it moves away from solely being stimulated by consumer spending, BNP Paribas UK economist David Tinsley has argued.
“The quarterly figures for industrial production, particularly manufacturing, suggest the economic upswing is continuing, if not accelerating,” Mr Tinsley said.
“This is a recovery not just based on the consumer. Manufacturing is powering ahead too.”