Monthly estimates of GDP from The National Institute of Economic and Social Research suggest that output grew by 0.7% in the three months ending in June after 0.9% in the three months ending in May.

Further acceleration in GDP growth would start to reverse the rise in unemployment seen over the recession. Unfortunately, the UK economy does face a number of challenges, the NIESR warns. Fiscal consolidation both in the UK and the euro area will restrict growth in the short-term and there is clearly a risk that this rate of growth will not be maintained through the rest of this year, the body says.

The NIESR interprets the term ‘recession’ to mean a period when output is falling or receding, while ‘depression’ is a period when output is depressed below its previous peak. Thus, unless output turns down again, the recession is over, while the period of depression is likely to continue for some time. The NIESR does not expect output to pass its peak in early 2008 until 2012.