I’m probably the only one who has visions of George Osborne as the Wicked Witch of the West, cackling “grow my pretties, grow” each time the Office for National Statistics (ONS) releases its latest data set on the UK economy.
Leaving aside for a moment that the often quoted line “Fly my pretties, fly” doesn’t appear in The Wizard of Oz (the Witch actually says, “Fly, Fly, Fly.” when she releases the frankly terrifying flying monkeys), Osborne has every right to be happy with the numbers.
The ONS has today released official figures for UK economic growth in the first quarter of 2014, showing the UK economy grew by 0.8% in the first three months of this year.
This represents the fifth consecutive quarter in which UK GDP has grown; the longest positive run for the UK economy since the global financial crisis.
But the size of the UK economy is still smaller than its peak size before the crisis.
In fact, it’s 0.6% smaller than the largest it previously reached in early 2008, when all of the banks turned bad and the bottom fell out of global money and equity markets.
Is it too much to hope that the UK economy will reach its peak within the next quarter or two? Hopefully not.
As the domestic and global economies continue on their path to recovery, investor and consumer confidence should also improve, leading to much happier (financial) times.
We still believe higher interest rates and an unwinding of quantitative easing (QE) is some way off, as markets and the economy need to more properly stabilise before central banks begin to rock the boat.
Investors should however already be thinking about a time where interest rates are higher than they are today; using any disposable income to pay off debts before they become more expensive is often a sensible financial planning strategy.
