Does the state of the British economy justify the safe-haven status of the government gilt market?

The official output data has recently been enough to confuse and worry even the most stout-hearted. It has suggested that the U.K. slumped into double-dip recession at the end of last year, before abruptly recovering to grow at the breakneck speed of 1 percent quarter-over-quarter from July to September — the fastest rate in five years.

This stop-start picture is not reassuring. Growth is key to the credibility of ambitious government plans to close the fiscal deficit. However, even after spectacular third-quarter figures boosted by the London Summer Olympics, the official statistics show the U.K. economy slightly smaller than a year ago.

Hope springs from mistrust: Analysts argue that it has become increasingly dangerous to rely on U.K. gross domestic product (GDP) numbers. Research by private-sector economists suggests that having published the figures for each quarter earlier than most other leading economies, the U.K. authorities are then forced to spend much of their time disowning their original off-the-mark estimates — with an average revision of about 0.4 percentage points for each figure, measured from first to latest assessment. Many economists believe that future reassessments of this order will revise away the recent recession into oblivion. Defenders might argue that the initial estimate of GDP data is only meant to be the first rough draft of economic history, but it has been a very rough first draft indeed — no better than doggerel to its critics.

Disillusioned by the official output data, U.K. economists have this year increasingly resorted to alternatives. Taking the labor market figures, which are generally revised far less radically, the employment rate has grown by almost a percentage point over the past year, pushing up the total number of people in work to a record high of 29.59 million. Growth in tax revenue has been stronger than one would expect during a return to recession, including chunky increases in value-added tax, the main consumption tax.

The relatively optimistic interpretation of the conflicting mass of recent numbers, based on jobs and tax, is probably the correct one, think many economists. It indicates that the U.K. has continued to grow at a sluggish pace throughout the year, despite some weak sectors — notably manufacturing, with Thursday figures from manufacturing purchasing managers showing a further month of decline in October.