Is Britain on the road to recovery?

Person with bags walking

As the Chancellor George Osborne puts the finishing touches to his Budget, due to be delivered on Wednesday, the BBC's Hugh Pym and George Alagiah have been investigating the state of the economy.

One prediction that will bring a sigh of relief to most of us is that many economists think millions of workers will finally see their pay grow faster than the cost of living by the middle of 2014. That has not happened since 2009.

That view is backed by University of Glasgow economist Jo Armstrong, who says higher employment and subdued inflation are likely to lead to a rise in real wages.

Are wages finally going to increase faster than inflation? Hugh Pym reports

The view from businesses

Businesses are beginning to feel more optimistic and the British Chambers of Commerce has predicted that this summer the size of the UK economy will overtake the peak it reached in 2008 before the financial crisis.

Liverpool hotelier Jackie Ormiston says her Beatles-themed hotel has seen a rise in both occupancy and the number of British guests as the recovery has taken hold.

Elsewhere in the city, the port's director David Huck notes an increase in goods on departing ships, reflecting the wider economy.

And factory boss John Rogers says: "The more we export, the better the UK economy will grow. We still have territories in the world that we have yet to crack, which is great news."

Liverpool's port activity reflects the wider economy, George Alagiah finds

Consumer-driven recovery

However, the lopsided nature of the recovery is still a concern - something that even Mr Osborne would acknowledge. It is still too dependent on the consumer.

Last year household spending grew by 2.4% while exports increased by just 0.8%.

"Most of the recovery has been dominated by the consumer, and we can't afford that to go on for beyond a year or so, or we'll run into fresh problems," says Jim O'Neill. The former Goldman Sachs economist and inventor of the term "Bric", used to lump together the emerging economies of Brazil, Russia, India and China, now heads up the City Growth Commission, which has the job of making sure growth is more evenly spread beyond the South East.

Economist Jim O'Neill warns Hugh Pym the recovery is consumer-driven

Skills shortage

But if the UK is going to export more, it needs to make more. And manufacturers claim the government is not investing enough in them.

Moreover, business leaders are concerned about the skills shortage in the hi-tech sector. The CBI, the business lobby group, has called for reduced tuition fees for science subjects.

BBC News presenter George Alagiah visited a robotics factory in Bristol and heard that the UK is trailing other countries' investment in technology.

This could cause talented scientists to leave, according to Prof Steve West, of the University of the West of England. He says: "Our big challenge is: Can we support them, to enable them to develop their ideas in the UK?"

Robot Gerry tells George Alagiah that Britain's tech investment is lagging

'I'm a burden'

So how are families feeling the effects of the improved economic climate?

"There is light at the end of the tunnel. We feel as if the recovery is happening," says Tom Simpson, whose business crashed in the economic crisis.

He now works at Tesco and alternates his hours with his wife, Susan, to keep childcare costs down.

It is hard but has meant the West Lothian family were recently able to take their first holiday in four years.

However, not everyone is feeling the recovery. "I'm a burden," says 25-year-old worker Jamie Caldwell. Although he has a good job, he lives with his parents in Johnstone and says they are "subsidising" his living.

Meanwhile, a comparatively well-heeled Paisley family told George Alagiah that their spending power had been eroded by soaring prices.

Zhou Zhou, from Paisley, says the family's living standard is dropping

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