The headlines today are celebrating the UK’s return to pre-crisis levels of economic output. GDP is back where it was in 2007. Deputy Prime Minister Nick Clegg declared, “The fact that the British economy is now as large, if not slightly larger than it was just before the crisis happened, shows that the rescue mission that we said was the principal purpose of this Government has worked.”
But is this GDP figure remotely relevant? The Chancellor and his cheerleaders would like us to believe it is a highly significant milestone in the country’s slow slow recovery. But the total size of the UK’s economy is not nearly as important as the level of output per person.
Because while we may, as a country, be producing as much as we were before the crash, there are now many more of us doing the production. Over two million more, in fact. Our output per person remains well below 2007 levels, which is why our living standards remain depressed. If we were truly back to where we started, we would expect the economy to have grown by at least as much as the population.
What practical significance is there in the truth that the total size of the economy is back to pre-crash levels? Absolutely none. This moment is purely symbolic — which won’t stop the government milking it to the full.