Low growth implications for living standards particularly bleak

James Plunkett is the secretary to the Resolution Foundation’s Commission on Living Standards

This morning’s weak Q2 stats (pdf) would be worrying in any recovery. But in the aftermath of such a deep fall in output their implications for real trends in living standards are particularly bleak. The UK economy still has a long way to climb back to pre-recession levels of output. Chart 1 below (now updated from a recent post to include Q2 stats) puts the scale of the task in perspective.

If today’s 0.2 per cent figure proves right, GDP remains 3.9 per cent below it’s pre-recession peak. Even if we see a strong rise in Q3, this will still have been by far the longest period in recent memory in which GDP’s upward march has lost its feet.

Chart 1:

The big question now is not just what happens next, but also what underlies today’s figures. We’ll need to wait until the publication of the Quarterly National Accounts on October 5th before we know how much of today’s anaemic 0.2 per cent growth rests on households sweating their savings to keep consumption moving.