Britain''s recovery pushes economy past pre-crisis peak

Britain''s economy is now bigger than it was before the financial crisis struck six years ago after strong growth in the second quarter that keeps it on track to lead the way among developed countries this year. The return to its pre-crisis size comes years after other major economies passed the same landmark but will be a relief for the government ahead of a national election in 2015.
Official data on Friday showed gross domestic product expanded 0.8 percent in the April-June period, the same strong pace as in the first three months of the year. In annual terms, growth was 3.1 percent, the fastest pace since the end of 2007. That meant total economic output was 0.2 percent bigger than its previous peak in the first quarter of 2008, the Office for National Statistics said. Prime Minister David Cameron credited his government''s focus on fixing the country''s public finances for the turnaround. "It shows if you stick to a long-term economic plan, you take the long-term and difficult decisions that are necessary, you can get the country back on the right path," he said.
The opposition Labour party, which has a narrow lead in opinion polls ahead of next May''s election, highlighted how slow Britain had been to regain its pre-crisis economic peak, something the party blames on government austerity measures. Germany passed the milestone in 2010 and France and the United States followed the next year. Some economists said Britain could yet suffer a "lost decade" given how far the economy remains from where it would have been if the financial crisis had not hit. Scotiabank''s
Alan Clarke said it could take until 2020 to make up for that lost potential. The economy largely flatlined after a 2008-09 recession but sprang back to life last year and Britain is set to be the fastest-growing of the Group of Seven rich nations this year, according to the International Monetary Fund. The recovery helped Royal Bank of Scotland to announce a surprise 1 billion pound ($1.7 billion) pretax profit for the second quarter on Friday as growth in the economy reduced losses from bad loans.