Oops! The ONS admits the UK economy is far stronger than it had thought

Why do economists use decimal points? To show that they have a sense of humour. Never was this old gag more relevant than when considering the data on Britain’s economic output, or GDP. A couple of months ago, the ONS announced that the economy had returned to its pre-crash levels – the FT splashed the news. Today, the Office for National Statistics admits that after improvements to its methodology this actually happened last year. The old picture, compared to the new, is above – produced by Michael Saunders at Citi (pdf here). The ONS has not made an error, it is simply applying new methodology under instruction. But it suggests Osborne has been making more progress than he had been given credit for.

Needless to say, this revision affects other metrics. Before, for example, there had been concern about the apparent refusal of British businesses to invest in the economy – well, now, it emerges they have not been so hesitant.