A step in the right direction, but the recovery needs a broader base

America and Germany surpassed pre-crisis levels years ago, and even Europe’s “sick man”, France, got there before us. In fact, only countries such as bailed-out Greece and struggling Italy lag behind Britain.

It’s also important to remember that, while manufacturing is an important part of Britain’s growth story, the sector, which powers around 11pc of the economy, will not secure the recovery on its own. Business investment across all sectors must improve, while export growth should also play a part. The Government’s drive to strengthen links between the UK and countries outside the European Union such as China will help to boost trade.

Sustainable growth also needs financial stability. For the UK, that means a well-functioning housing market. Bank of England data on Tuesday showed the number of home buyers taking out riskier mortgages rose to its highest point in more than five years in the first quarter.

The proportion of buyers with a deposit of less than 10pc and a loan worth more than 3.5 times their income almost doubled in the first quarter to 2.6pc, up from 1.49pc in the final three months of 2013.

While this is low by historical standards, Mark Carney, the Governor of the Bank of England, has warned of the dangers of a “another big debt overhang” that could hurt individuals and slow the economy in the medium term.

The UK is currently in the sweet spot of the economic cycle. Strong growth and low inflation is buying time for the Bank to keep rates low while the recovery becomes entrenched. Whether the economy can remain in this sweet spot will be borne out in the coming months. If the Bank’s so-called macro-prudential toolkit fails to cool the housing market, or if inflation begins to take off, Mr Carney may have no choice but to call upon his “last line of defence” and raise interest rates sooner than expected.

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