The UK economy – what a difference a year makes
This time last year, an imminent sovereign credit rating downgrade and a 1-in-3 chance of a new recession dominated talk on Britain’s economy.
To say 2013 turned out better than expected – at least by the simple yardsticks of economic growth and unemployment – would be an understatement, then, even if tepid wage growth, weak productivity and a rising cost of living still dog the economy.
None of the 63 forecasters polled by Reuters in Jan last year predicted that growth for the 2013 as a whole would hit 1.9 percent, as official data showed on Tuesday.
Back then, the consensus showed the economy would only grow around 1.0 percent, and many flagged some big downside risks even to that outlook.
That pessimism was summed up in the sub-header in the story for that’s month’s poll: “Bumping along the bottom”.
Economists take a lot of flak for missing turning points in major economies, most notably their collective failure to spot the severe recession of 2008-09 until it had already started.
But before dismissing 2013’s larger-than-expected upturn as another “miss”, it should be noted that economists got a lot right about the UK economy this year.
The Reuters poll consensus was spot-on in predicting the each of the Office for National Statistics’ preliminary GDP releases for the last three quarters of 2013, and only slightly undershot first quarter’s reading.
This year, economists reckon growth will hit 2.5 percent.
So far, the omens are good.