UK economy is improving but people may not notice

The latest UK growth figures are important not because they show a boom, they do not. If sustained they show an economy returning to a normal rate of growth. The UK is now growing joint fastest in the G7, equal with Canada and outpacing France, Germany, Italy, Japan and the United States. But because growth has been so sluggish for several years, what was normal growth before the financial crisis of the late 2000s is also very robust by recent standards. The economy has proven remarkably resilient to all the shocks thrown at. Interest rates were near zero for 15 years before the sharp rises over the past year and a bit have seen them rise to their highest level in 16 years. The hope would be that this start to 2024 could give momentum to the economy throughout this year, generating more business and consumer confidence. The imminent fall in inflation close to the normal target level of 2% will underline this. Interest rates should also start to fall in the summer, but the strength of the growth number may lessen the chances of a cut next month. UK exits recession with fastest growth in two years What is GDP and how does it affect me?But there are many millions of households for whom normal growth will not feel good. When I go around the country and ask people about recession ending, there is a mixture of resignation, laughter and annoyance. The significant hike in the level of prices is what households notice the most, more than the rate of inflation or GDP. While per capita GDP is now also up for the first time in two years, it is still lower now than two years ago. Will people be grateful for a turning point? Or will they focus on years of sluggish growth and declining living standards before that? The economic hangover from the worst health crisis in a century and the worst energy crisis in a generation was always going to be tough, but the economy now appears to be returning to normal. And if sustained, that is a marked improvement.