British economy grows 0.8 per cent in 2nd quarter, exceeds pre-downturn level

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LONDON – Britain’s economy has grown to surpass the peak it reached in 2008, before the global banking crisis caused a deep recession, official figures showed Friday.

The Office for National Statistics said gross domestic product grew by 0.8 per cent in the three months through June compared with the previous quarter. It expanded 3.1 per cent over the year, putting it 0.2 per cent ahead of its pre-crisis peak in early 2008.

The global financial crisis triggered a deep downturn for the British economy. By mid-2009, GDP was more than 7 per cent below its pre-recession level.

Treasury chief George Osborne said Friday’s figures marked a “major milestone in our long-term economic plan.”

On Thursday, the International Monetary Fund predicted that Britain’s economy would grow by 3.2 per cent this year, making it the fastest-growing among major industrialized nations.

Opposition politicians and some analysts warned that the recovery is built on shaky foundations. Much of the GDP growth was in the services sector, which expanded by 1 per cent. Manufacturing grew by 0.2 per cent, while construction shrank by 0.5 per cent.

“The U.K. economy isn’t as strong as it looks,” said Ben Brettell, senior economist at stockbrokers Hargreaves Lansdown. “While it has surpassed its pre-crisis peak in absolute terms, a larger population means GDP per capita is around 6 per cent lower.”

In another sign of returning financial-sector confidence, the Royal Bank of Scotland announced Friday that its pre-tax profits nearly doubled to 2.65 billion pounds ($4.5 billion) in the first half of the year. RBS was bailed out by the British government during the crisis and remains 81 per cent owned by taxpayers. Its shares jumped over 13 per cent after the earnings report.

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