UK economy fuelled by 'dirty growth', says social reform group

(AP)

The British economy has exceeded its pre-crisis levels, the Office of National Statistics (ONS) reported today.

While this is being heralded as a triumph for the government's austerity measures, Christian social reform organisation The Jubilee Centre says the rise is fuelled by 'dirty growth'.

The Office of National Statistics announced today that output grew by 0.8% in the second quarter of this year.

The IMF also indicated this week that the UK economy is likely by 3.2% this year, making it the fastest growing economy in the developed world.

"A lot of this growth has come from increased consumer spending, and a lot of that increased spending has come by borrowing more," said Jonathan Tame, executive director of the Jubilee Centre.

The service industry, which accounts for 80% of the UK economy, has surpassed 2008 levels, whereas the manufacturing industry has not.

Despite the growth in the national economy, household incomes are thought to be more than 6% lower than their pre-crisis peak levels, according to the Institute for Fiscal Studies.

"Households still aren't better off. The people who have benefitted are the owners of assets, owners of capital, and senior executives whose wages have been going up," said Tame.

"It's not very ethical or clean growth – it's like when you're generating power, it's causing pollution – it's dirty growth in many ways.

"If it leads people to borrow more, that's not good and if it continues to push up the costs of housing, then there's a growing percentage of the population who are not home owners."

The ONS said that average UK house prices increased by about 10% in the year to May 2014, although prices appear may now be slowing down.

"We can say there is some good news, but it's by no means universal," Tame said.