Official figures show that, despite a slow first quarter, GDP grew 0.7% in the second quarter. Growth over ten consecutive quarters means that this is the third longest spell of growth since 1955 and senior figures have said that we are “motoring ahead” and that “we’ve rarely had it so good.” However, despite the positive signs, there are still caveats and economists have primarily pointed to the fact that there is considerable disparity depending on the type of job and the type of person that you are.
GDP only tells a small portion of the story, and GDP per head is considered a better ranking factor by most. Even here, however, there are positive signs as economists say that the GDP per head is roughly the same as it was at the beginning of 2008 before Britain was forced into recession following the banking crisis.
However, those same economists have also warned of a two-speed economy, and said that the latest increases have been fuelled almost solely by the services sector. Manufacturing saw a 0.3% decline, and construction remained flat. Although the Chancellor George Osborne pointed to the positives, critics have said that he had promised improvement for manufacturers, but that this has not yet come to light. The TUC General Secretary Frances O’Grady also said that while there was demand for low cost housing, the construction industry remained unmoved.
One of the possible causes of the decrease in manufacturing is the strength of Sterling, and things do not look set to improve in this regard just yet. Immediately following the announcement of the GDP rise, Sterling moved even higher against the Dollar and Euro, while increased calls for interest rate increases only look set to further strengthen the currency.
GDP figures almost always cause dispute and debate among analysts, economists, and politicians, with each wanting to put their own spin on the figures. However, while an increase in GDP is positive, and a continued increase is even better, there are still some areas that need addressing otherwise the country will continue to see a two-speed economy.