GDP back to pre-recession levels… but here’s what today’s economic figures don’t tell you

It’s party time at the House of Commons, as the Office for National Statistics today revealed our GDP is back to the level it was before the recession.

It was up 0.8% in the second quarter of this year compared with the same period in 2013.

This morning David Cameron and George Osborne seemed pretty pleased:

It’s encouraging news that the economy is larger than pre-crash levels. Our Long Term Economic Plan is working & this is a major milestone.

— David Cameron (@David_Cameron) July 25, 2014

Economy bigger than previous peak in 2008 but long way to go-the Great Recession was one of deepest of any major economy & cost UK 6 years

— George Osborne (@George_Osborne) July 25, 2014

Which is the political equivalent of:

Video:

Fresh Prince happy dance

But wait.

While this is, of course, great news for Britain’s economy, if we take a closer look, things are not quite as wonderful as they seem.

GDP per capita is down

If you spread GDP out over the whole population, it’s actually still 6% lower per capita than it was before the start of the recession (because of population growth).

The slowest recovery in 100 years

The UK recovered quicker from the recessions of the 1920s, 1930s, 1970s, 1980s and 1990s than from the one we’re in now. And some of those recessions were deeper, too.

If you think you’ve had a pay rise, you probably haven’t

The rate of inflation, which is around 1.9% at the moment, means everything is costing more. That’s the norm, and is totally fine if your pay is going up at that rate too.

But most people’s wages aren’t going up in line with inflation – in fact the average annual pay rise is only 0.3%.

So unless you’re getting a 2% annual pay rise (or more), you’re taking a pay cut in real terms.