- Economic growth measures the change in real GDP (national income adjusted for inflation; ONS call it chained volume measure of GDP)
- In 2014 the UK economy grew by 2.4% – (compared to 1.7% in 2013.
- GDP was 2.6% higher in Quarter 2 (Apr to June) 2015 compared with the same quarter a year ago.
- The peak to trough fall of the economic downturn in 2008/2009 is now estimated to be 6.0%
- In 2013, GDP at market prices was £1,713,302 million (£1.7 trillion)
- Updated September 14th, 2015
Recent UK Economic Growth
Source: ONS IHYQ
Economic growth per GDP
With population growth averaging around 0.6 – 0.8% a year (about 50% of population growth is caused by net migration), real GDP is boosted by this growth in population. Real GDP per capita and average incomes, are growing at a slower rate.
Recent history of economic growth
- Since the recession of 1992 ended, the UK experienced a long period of economic growth – it was the longest period of economic growth on expansion. Also, the growth avoided the inflationary booms of the previous decades. However, the credit crunch of 2007-08 hit the UK economy hard and caused a steeper drop in real GDP than even the great depression of the 1930s. Helped by a loosening of monetary and fiscal policy, the UK experienced a partial recovery in 2010 and 2011. But, by Q1 2012, the UK was back in recession.
- The second double dip recession was caused by a variety of factors including European recession, lower confidence caused by austerity measures, continued weakness of bank lending and falling real incomes.
- Since the start of 2013, the UK economy has experienced positive economic growth – one of the relatively best performances in Europe. However, real GDP is still fractionally below it’s pre-crisis peak of 2007.
- The recovery has been stronger in the service sector than manufacturing and industrial output. There are fears the UK recovery is still unbalanced – relying on government spending, service sector and ultra-loose monetary policy.
It is worth bearing in mind that sometimes economic growth statistics get revised at a later stage.
Real growth rate compared to trend rate
Source: ONS – ABMI
An illustration of how actual GDP has fallen behind the trend growth of GDP, since the start of 2008.
Usually, the gap between actual growth and the trend rate is an indication of the output gap in an economy. But, given the length and depth of the recession, we have permanently lost some output – The ONS calculate the output gap as quite small.
Real household disposable incomes per head
Source ONS – IHXZ
This shows real household disposable income per head. This is an important component of GDP, but GDP is also composed of other income sources, such as profit and dividends. This shows that real household incomes per head have been stagnant since 2007.
Real GDP since 1955
Two Decades of Volatile Growth in the UK.
This shows quarterly growth rates to get an annualised growth rate multiply by 4.
More detail of this period:
Economic Growth and Unemployment
A feature of the UK’s recovery since 2013 has been that unemployment has fallen faster than in previous recession – in the 1980s and 1990s unemployment lagged behind the recovery. This fall in unemployment is due to several factors, such as – more flexible labour markets, low wage growth and low labour productivity. (UK Unemployment mystery)
Economic Growth and Inflation
further reading: is inflation caused by economic growth?
Notes on Economic Growth
- Causes of economic growth
- Costs of economic growth
- Factors affecting economic growth
- Lists of recessions
Historical Economic Growth
Volatile growth following world wars and period of recession in the 1920s and 1930s.
Post war Economic growth
Post war Boom and Busts in the UK.
Economic Growth rates in EU
Note on statistics
- The ONS produce statistics for chained volume measure of GDP. This is effectively real GDP
- GDP at market prices doesn’t take into account inflation.
See: ONS datasets for GDP
- UK GDP since 1955 at Guardian