The service sector has just about regained all the ground lost during the recession of 2008-09, but the same cannot be said of industrial production and construction. After declining gently in the eight years leading up to the recession, industrial production subsequently contracted by 12% and after a double-dip downturn is now 15% below its peak. Construction has shown a similar profile. Activity flat-lined in the four years before the crash, dropped by almost 20% and is still 15% down even after the recent pickup.
That's not the sign of an economy that's out of recession. Far from it in fact, for as he notes (and as I have done likewise, often):
There are four ways in which an economy grows. Companies can decide they need new kit (investment); Britain can sell more overseas than other countries sell here (net exports); the state can play a bigger role (government spending) or households can spend more (consumption).
Right now I share Larry's view. Investment is pretty flat, export prospects are poor, government spending is under continual threat and so growth is based on consumer spending. This is, because wages are growing at a lower rate than prices, funded by increased consumer borrowing whether on mortgages or as worryingly, unsecured loans at high prices reflecting considerable vulnerability.
This is not surprising: this is exactly what the Office for Budget Responsibility forecast in 2011. This is the basis for Osborne's economic growth plan for the UK and it is coming to pass. If in doubt look at this graph based on 2011 OBR data, prepared by Duncan Weldon now of the TUC in 2011:
Household debt is the foundation of Osborne's recovery plan.
As Larry Elliott concludes:
Most likely, growth will be dependent on easy money, rising debt and a temporary fall in inflation prompted by falling food and commodity prices.
Osborne hopes this will deliver for him. But there is a problem. It is this scenario that delivered the UK's bigger than average economic crash in 2008 and right now we're heading there all over again. And that's deeply worrying.