UK Economic Recovery: GDP Set to Surpass Pre-Recession Peak

It is likely that the UK economy has surged past its pre-recession peak- in a significant landmark moment in the recovery.

The Confederation of British Industry (CBI) said its monthly survey of 790 firms across the manufacturing, retail and service sectors registered a balance of +29% in July.

This is the difference between those reporting an improvement in activity and a worsening. It was the same as June.

This figure, from Britain's biggest business lobbyist, comes a day ahead of official GDP statistics for the UK economy in the second quarter. Growth was 0.8% in the first three months of the year.

However, the recovery has mostly relied on higher household spending as families wear down their savings. Wages have declined in real terms as pay increases have been more slow than price inflation.

And exports are weak because global demand is subdued amid the ongoing eurozone crisis and slowing growth in key markets such as China.

"The recovery shows little sign of slowing and it's looking likely that GDP has surpassed its pre-crisis peak," said Katja Hall, deputy director-general of the CBI.

"There are signals that the recovery may now be on a more sustainable footing, with growth becoming more broad-based as business investment in particular grows strongly.

"But there are still long-standing issues around boosting exports, while disappointing productivity could impact wages and household spending."

Hall also said firms were "carefully monitoring" geopolitical turmoil, such as the Ukraine crisis and Gaza-Israel conflict, because "volatility is likely to make the global economic environment that bit tougher".