Britain’s economy finally passed its pre-2008 financial crisis peak

But estimates due on Friday from the Office for National Statistics are predicted to show that in the second quarter of 2014 it expanded beyond the pre-crisis peak, rising to just more than £393bn, reports The Telegraph.

The ONS will report economic growth figures for the three months to the end of June, which are likely to show the British economy grew by 0.8pc in the period.

Ahead of the figures from the ONS, the EY Item Club said GDP will rise by 3.1pc over 2014, more than any other G7 nation. Peter Spencer, chief economic adviser to the Item Club, said: “Output has actually surpassed the peak that we saw back in 2008. In other words, the recession is over.

“Not only is the recession over but the recovery is technically over and we’re now moving into a period of expansion.”

The Item Club predicts that capital spending by companies will rise by 12.5pc this year, reducing the reliance on the consumer spending which has so far largely driven the economic recovery.

Yet the return to pre-recession output comes long after equivalent milestones in other large European economies and in the USA, which reached it in 2011.
The sustainability of the recovery has been questioned, with Kenneth Clarke, the recently sacked cabinet minister and former chancellor of the exchequer, saying it was “only halfway through”.

In a newspaper interview he said: “We’ve saved the country from calamity but we’ve got a long way to go before we get a competitive economy with sustainable levels of growth.

“It’s not firmly enough rooted on a proper balance between manufacturing and a wide range of services and financial services. I mean, we have this mystery of why we can’t get productivity to start rising again.”

But Mr Spencer disagreed with these comments, claiming that future growth will be more sustainable because it will be financed by a rise in the number of people who work, not consumer borrowing or a growth in wages. He said employment growth was being driven by older workers retiring later, benefit claimants coming off welfare, and immigrants entering the country, which has compensated for a fall in wages.

He added that changes to the way GDP is measured, such as including black-market trading such as prostitution and drug dealing, may show the UK “sailed past the previous peak long before”.