Recession may be over, but the UK economy is moving at a sloth-like pace

Credit: PA

The three-toed sloth is half blind, half deaf and one of the slowest animals on earth.

Native to the rainforests in Central and South America, sloths are so slow that vegetation, such as algae, can grow on their backs.

For some time now, the British economy has been doing a passable impression of a sloth.

Officially, the UK entered the shallowest of recessions in the last six months of last year as gross domestic product (GDP) - a measure of the value of all the goods and services we produce - contracted.

Unofficially, that recession appears to have already ended.

ITV News Business and Economics Editor Joel Hills explains if the latest figures are reason to be positive

GDP rose again in January compared to the previous month, albeit at a sloth-like pace of 0.2%.

Inflation is fading, real household incomes are growing again, more companies are reporting an increase in sales and markets are betting that the Bank of England will begin cutting interest rates in August.

In an election year news that the recession, such as it was, is probably over, matters greatly.

Not least to the Conservative Party, which trails Labour by roughly 20 points in the opinion polls.

But in economic terms, whether the UK economy grew a little in January or shrank a little in December isn’t really relevant.

We obsess about GDP because it’s a measure of prosperity and wellbeing.

The big picture is one of an economy which is stuck in a low gear.

Monthly figures are volatile, but on a more stable quarterly, or three-month, basis, the GDP of the UK is only 1% higher now than it was before the pandemic arrived four years ago.

And a major reason the economy is larger is because the population has grown, from 66.9 million in the fourth quarter of 2019 to 68.6 million today.

More people producing roughly the same amount of stuff leaves no one feeling better off.

At the end of last year GDP per person in the UK, a better indicator of living standards, was 1.5% below where it was pre-pandemic in the fourth quarter of 2019.

If we want to be feel more prosperous, if we want to raise more money to fund public services, then the easiest way to do it is to find a way to revive economic growth.

We should be asking our political parties how they plan to help do this.

The UK economy is moving forwards again - it may have turned a corner but it is velocity that matters most.

As it stands, like the sloth, we are stuck in the slow lane.

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