UK economy: Half-speed ahead

For once the official estimate for growth in the last three months was in line with the unofficial ones cooked up in the City. Between them they all reckon our national output was 0.6% higher in the second quarter than in the three months before and 1.4% bigger than it was a year ago. That's the fastest annual rate of growth since 2011.

Should we be pleased? Absolutely. But I doubt that the chancellor or the Bank of England governor will call themselves satisfied.

Remember the second quarter of 2012 was artificially depressed by the extra Bank Holiday. Looking through that distortion, today's figures suggest that the UK has grown at roughly half its long-term rate in the past year. Output is still 3.3% below its peak at the start of 2008, and average living standards (GDP per head) have even further to go to catch up where they were.

But, you know this. We've been saying it - off and on - for months. Nick Robinson and I said it again on the Today programme this morning.

What is new - or at least different - in these figures is that, for once, most parts of the economy have played a role in this growth, with production and construction each growing alongside the ever-dominant service sector.

I have spoken before about Britain having "the wrong kind of growth". We can't say for sure whether growth in the past three months was more balanced, until the Office for National Statistics brings us a more detailed breakdown of GDP. But there have at least been some encouraging straws in the wind on the exporting side, with exporters reporting rising orders in the British Chambers of Commerce survey that came out earlier this week. The mood among services exporters was especially upbeat.

Is this the start of a more fundamental re-balancing in the economy? I haven't been able to find many in the City who believe that, at a time when investment is still historically weak, and borrowing by consumers is picking up. But at least things in the productive side of the economy have stopped getting any worse.

Once again, in these figures, we see how very differently the past few years have treated different parts of the economy. We may not formally have had a double dip recession between 2011 and 2012, but you can see from the chart that manufacturing and construction had a very pronounced double dip, from which they are only now tentatively recovering.

Though services are now nearly back to where they were before the recession, manufacturing is still 10% in the hole, and construction output is more than 15% below where it was.

Taken together, the chancellor's supporters say the numbers give the lie to Ed Balls - and all those who blamed austerity for our slow recovery. If that's true, Mr Osborne's advisers say, why is the economy growing now, despite the continued fiscal squeeze? And why has the domestic side of the economy been doing OK all this time, with the big drag on the economy coming from the rest of the world?

Ed Balls will have his own answer to that. It is certainly a good time for the shadow chancellor to be in America rather than here.

Clearly, events in the eurozone and the rest of the world have made things a lot harder for us. But the Treasury has never denied that fiscal tightening, by itself, will have slowed growth as well. The IMF, for example, said last year that austerity had lowered GDP by 2.5% in the government's first two years in office.

As ever, the answer is not black and white - at least to economists. Even if our politicians are blessed with greater certainty.

To take just one example: in explaining slow growth in the past, both the Bank of England and the Office for Budget Responsibility have tended to emphasise not just the eurozone but the impact on consumers of rising imported energy and food prices. That is certainly an "external factor".

But, some economists would argue that the rise in imported inflation was itself made worse by the low value of the pound, which - in turn - might be at least partly due to the government's determination to rely mainly on the Bank of England printing money to deliver the recovery, while the chancellor got a handle on borrowing.

The truth is we'll never have a definitive explanation for the long delay in Britain's recovery. What we do know, at least until the numbers are revised, is that Britain's economy is growing faster than it was before, and a little bit faster than many expected a few months ago.

To return to where I started - we probably shouldn't be satisfied. But we are allowed to be pleased.