After years in the doldrums, Britain appears to be in the midst of sustainable growth. But it’s not good news all round.
Growth is what countries need if living standards are to rise, and the latest official figures show that the economy grew at a creditable 0.8 per cent in the first three months of 2014.
It was the fifth consecutive quarter of rising output – Britain’s best economic performance since the financial crisis pushed the country into a deep recession whose effects are still being felt.
But we need to be cautious before proclaiming that happy times are here again.
Under attack from Labour over the so-called “cost of living crisis“, the government was cheered by figures released in April which show that average pay rises are outstripping inflation for the first time in four years.
But these figures include bonuses. Strip them out of the equation and wages are not keeping up with the cost of living.
And pay in the public sector, an important part of the government’s strategy to cut the deficit, is rising at a lower rate than inflation.
Since the recession, there has been an increase in the number of people on zero hours contracts. Aside from the inconvenience of not knowing when they will be working from one week to the next, many people in this position are also having to contend with low wages.
We should also not forget that real average wages – what we earn after inflation – have fallen by 6 per cent since the recession, according to the Resolution Foundation.
Another sign of an economy moving in the right direction is falling unemployment. Again, there are reasons to be cheerful here, with joblessness declining and employment reaching record levels.
Unemployment for 16- to 24-year-olds, which rose during the recession to worrying levels, is also falling. But there are still more than a million young people in the UK who are not in education, employment or training – 14 per cent of the total.
Big debts after university are also taking their toll on people who are having a tougher time than previous generations.
Rising house prices are good news for those downsizing – older people selling their four-bedroom home in London and buying a bungalow in Kent.
But there is less to cheer about if you are young and trying to climb on to the property ladder, particularly if you are having trouble securing a mortgage because you cannot save enough for a deposit.
The government’s help to buy scheme is an attempt to tackle this problem, by offering taxpayer support to would-be buyers. It is unfortunate that some lenders involved in the scheme are already raising their interest rates.
Then there is the “mortgage market review” – a worthy attempt to avoid a housing bubble that sees people defaulting on loans they cannot afford.
Lenders are now scrutinising buyers’ finances more carefully than in the past, and there are bound to be cases where people are turned down for loans they could afford to repay.
The alternative to buying a home is renting one, as Generation Rent knows only too well.
The problem is that with supply failing to keep up with demand, rents are rising faster than incomes in some parts of the country, meaning that a higher proportion of people’s wages are spent keeping a roof over their heads.
Falling unemployment has been accompanied by a shake-up of the benefits system. The benefit cap limits welfare payments to a maximum of £500 a week for working-age people – in line with the average wage.
The policy has been criticised as a blunt instrument because it does not take into account where people live (and the rents they pay) and how many children they have.
Those falling foul of the new cap have seen their benefits cut, as have people living in social housing with a spare bedroom.
These policies enjoy popular support and the government insists they are providing the motivation many people need to find jobs.
Putting aside the rights and wrongs, benefits have only ever provided a subsistence lifestyle and those who have seen their payments cut, as a result of the government’s austerity drive, have little to celebrate when they hear the economy is on the up.
George Osborne talks to Economics Editor Faisal Islam