The UK financial system is way larger than earlier than the Covid-19 disaster than first thought, with the nation’s progress outpacing Germany and France, new revisions to official knowledge this morning revealed.

Gross home product is now estimated to be 1.8 per cent bigger in contrast with the ultimate months of 2019, simply earlier than the pandemic swept via the nation, in accordance with the Workplace for Nationwide Statistics (ONS). The revised figures imply that the financial system has added about an additional £10 billion in output for the reason that ultimate quarter of 2019.

Below its preliminary estimates, the statistics company thought the financial system was 0.2 per cent under its pre-pandemic ranges. The brand new figures come after the ONS stated earlier this month, in a re-estimation of output, that Britain’s GDP reached its pre-Covid measurement within the ultimate months of 2021. It was nonetheless regarded as decrease solely a number of weeks in the past.

That change meant the nation misplaced its place because the worst performing financial system within the G7, a title that has been handed over to Germany, whose financial system is regarded as about the identical measurement as earlier than the pandemic. It additionally implies that the UK’s efficiency has outpaced that of France, which is estimated to be 1.7 per cent bigger.

Jeremy Hunt, the chancellor, stated: “We all know that the British financial system recovered quicker from the pandemic than anybody beforehand thought and knowledge out at present as soon as once more proves the doubters flawed. Since 2020 we’ve got grown quicker than France and Germany.

“One of the simplest ways to proceed this progress is to stay to our plan to halve inflation this 12 months, with the IMF forecasting that we are going to develop greater than Germany, France and Italy in the long term.”

The revised figures will present a lift for prime minister Rishi Sunak heading into the Conservative Get together convention, which kicks off in Manchester on Sunday.

Samuel Tombs, chief UK economist on the Pantheon Macroeconomics, stated that the modifications imply that the UK “not is the G7’s straggler”.

Right this moment’s contemporary calculation was contained inside ultimate estimates for second-quarter GDP progress this 12 months, which was unchanged at 0.2 per cent, according to analysts’ expectations. The ONS raised its first-quarter progress estimate, nonetheless, to 0.3 per cent from 0.1 per cent.

Grant Fitzner, chief economist on the ONS, stated: “Right this moment’s newest figures present that the GDP progress fee is nearly unrevised during the last 18 months. Our new estimates point out a stronger efficiency for skilled and scientific companies as a consequence of improved knowledge sources.”

Entry to richer info led the ONS to boost its estimation of output throughout the pandemic, with client spending and healthcare output receiving large upgrades.

Analysts at Nomura, a Japanese funding financial institution, stated: “Just about every thing has been revised up by way of the place the financial system stands relative to earlier than the pandemic.”

Earlier than the revisions the ONS had lengthy held the view that GDP had but to recuperate to its pre-Covid degree. This meant that buyers have been basing their selections on knowledge that was overstating the UK financial system’s underperformance, suggesting that UK property had weakened greater than merited.

Nevertheless, a lot of the ONS’s modifications had been to financial knowledge earlier than 2022, which means the statistics company didn’t re-examine a interval by which the UK financial system has grappled with sky excessive inflation and aggressive rate of interest rises by the Financial institution of England.

More moderen proof means that the financial system is creaking underneath the burden of tighter financial coverage. Buying managers’ indexes flagged companies are shedding employees on the quickest tempo outdoors of the pandemic since 2009 and official GDP estimates confirmed the financial system contracted 0.5 per cent in July.

Financial institution governor Andrew Bailey and the remainder of the rate-setting financial coverage committee have raised the UK’s base fee to a 15-year excessive of 5.25 per cent. Weakening financial exercise and a shock drop in inflation to six.7 per cent satisfied the group to carry charges final week for the primary time since November 2021.

Ruth Gregory, deputy chief UK economist on the consultancy Capital Economics, stated: “Larger rates of interest will set off a light recession involving a 0.5 per cent fall in GDP within the coming quarters.”