The UK economy is showing modest signs of improvement,
but it is not out of the woods yet. Chris Bates provides an update
on the current outlook.
The Chancellor was handed some positive news for a change when
first quarter gross domestic product (GDP) came in at 0.3%, beating
expectation but failing to excite equity markets. The figures show
that GDP is back to the level it was at the start of 2007, but
remains around 2.5% below its previous peak level. More encouraging
was the 0.6% rise in services output, which accounts for around 70%
of UK GDP.
Real wages continue to fall
A key issue for the economy going forward is the continued
decline in real wages, which has weighed heavily on consumption.
Declining real wages also remain a key piece in the UK's
'productivity puzzle', where output has fallen but
employment growth has remained relatively robust. Firms continue to
hire at low wages, taking on more, but not necessarily more
productive, workers than they
