In 2014 we saw aggregate output in the UK finally regain its pre-crisis level. This does not constitute a full recovery since, in normal circumstances, output would have grown considerably during this period. However, it is a significant milestone in the process of recovery from the worst recession since the 1930s.
Significant threats to the recovery remain in the form of weak growth of the European economies and continuing fragility of the European banking system. These dangers have prompted the Bank of England to continue with its policy of a low base rate of interest. The budget deficit has remained stubbornly high despite the government’s commitment to a fiscal austerity programme.
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