The ONS has just released new estimates of GDP data for the period 1997 to 2012, which show that the Great Recession was shallower than previously thought, while the subsequent recovery has been stronger.
GDP now looks to have passed its pre-crisis peak last year, rather than in Q2 of this year. When matched with the more accurate estimates of employment, the new data suggests faster productivity growth, although overall, the post-recession productivity picture remains poor, just not as bad as under the old estimates.
The implications for the monetary policy debate are limited: hawks can argue that the economy looks stronger, while doves can point to the improvement in productivity. The debate within the MPC is still very much focused on wage data, with a majority still reluctant to raise interest rates until there are signs of an improvement in average earnings. We expect interest rates to rise very gradually in 2015.
