UK economy recovered faster than earlier thought

The economy recovered from the 2008 financial crisis nine months earlier than thought, sweeping revisions made to official figures showed, The Independent reported.

Changes to the way the Office for National Statistics calculated GDP showed that the UK economy hit its post-crisis peak in the third quarter of last year, rather than in the middle of this year.

The changes factored in illegal activities, such as drugs and prostitution, as also business' spend on research and development. The up growth was also revised in the second quarter of this year to 0.9 per cent, from 0.8 per cent previously, with GDP now 2.7 per cent above where it stood at the start of recession in the first quarter of 2008.

However, the ONS revised down its figure for the first three months of 2014, to 0.7 per cent from 0.8 per cent and there was also a downward revision to growth in the final quarter of 2013, from 0.7 per cent to 0.6 per cent.

The performance of the economy over the past six years looked better due to the revisions, with the Treasury welcoming the revisions as a sign that George Osborne's ''long-term economic plan is working''.

Meanwhile, the International Business Times reported that the UK economy was healthier than earlier thought. The Office for National Statistics (ONS) revised its previous estimate of GDP growth in the second quarter to 0.9 per cent, from 0.8 per cent, with the economy on course to grow by over 3 per cent in 2014, the fastest rate in the western world.

But there were, a number of challenges facing the recovery and while the headline GDP data might look good, other figures might be pointing to a very different state of affairs.

For instance, interest rates were low and would rise.

The Bank of England had held its base rate down at 0.5 per cent, an all-time-low, since 2009 to keep credit cheap and support the economy even as it struggled.

However, as the headline economic recovery strengthened, monetary policymakers wanted to start increasing interest rates again to prevent people taking on excessive debt while it was cheap and to give savers some respite after years of dismal returns.

Mark Carney, the central bank's governor, had stated often that a rate rise would be gradual and the base rate would settle well below historic norms of around 5 per cent.