Britain needs a miracle, and not in the shape of another debt binge The distinction is important because most analysis of the recovery starts from the moment the recession began. The economy is almost 20pc smaller than it would have been without a crisis, we're told. Productivity is about 15pc below its "pre-crisis trend." Britain's recovery has been worse than any fellow G7 nation except Italy, with the economy still almost 4pc smaller than in 2008 - even after Friday's growth upgrade. On a per person basis, arguably a more relevant measure of citizens" wealth, it's even worse. The economy has not recovered from the depths of the recession at all. It doesn't take much to trigger self-loathing in the British psyche, so it's no surprise that the miserable data has fuelled the nation's negative inclinations. At the same time, the downbeat analysis has influenced both the political debate and policy. But there is another way to view the figures. Taken over a longer timeframe, the UK has done pretty well - and the data even suggests Britain was in the throes of a mini-boom. If 2000 is the start date, the UK jumps from the second worst to second best among the G7 - behind Germany - on an output per person basis. Amazingly, by 2007, UK GDP per person had grown at twice the rate of the US. Take the start date further back, to 1980, and the US, Germany and France are all still playing catch up. But, however you cut the numbers, they all point to the same phenomenon - that the UK enjoyed a spectacular rate of GDP growth per person from 2000. It just so happens that the out-performance coincided with Britain's debt bubble. According to analysis by McKinsey, total UK debt - households, companies, banks and the Government - rose from 3.1 to 4.9 times GDP between 2000 and 2008, the biggest rise among the 10 largest developed economies. Common sense suggests the UK enjoyed a debt-fuelled boom before the crisis but it's not easy to prove because growth never ran out of control and inflation was capped by cheap imports and cut-price foreign labour. Moreover, unemployment remained around its so-called structural rate of just over 5pc, so the automatic alarm bell was never triggered. The data has allowed King to get away with claiming he presided over a "period of steady and sustainable growth," even though everybody's gut says different. But a paper by Peter Goodridge, Jonathan Haskel and Gavin Wallis published by the National Institute for Economic And Social Research earlier this year provided evidence of a bubble of sorts. While investigating the productivity puzzle - why the UK seemingly now needs to work harder to produce the same amount - the three economists found there had been a massive underinvestment in "intangibles," such as software and R&D, between 2000 and 2008. Those "intangibles" do not add to measures of economic output or business investment because they are treated as expenses. But a lack of "intangible" investment can depress future growth, the study found. What appears to have happened was that companies channelled money into more immediately profitable, readily measurable investments such as machinery and property, flattering today's figures at the expense of tomorrow's. One of the paper's conclusions was that "growth was being overstated during that time [2000-2008]." And, as investment in "intangibles" has since picked up, the suggestion is that growth is being understated now. Just what the sustainable rate of UK growth is - the Office for Budget Responsibility estimates it at 2.2pc - and how close we are to being there is the big economic question today. It has ramifications for interest rate decisions and fiscal policy. But, for all the billions of pieces of data available, nobody honestly has an answer. Mark Carney, the new Bank Governor, has gamely admitted he has no idea when the economy will be back at cruise speed again or what that speed is. Instead, shrewdly, he has set policy to respond to circumstance. The Bank's new commitment to keep interest rates on hold until unemployment falls to 7pc is a smart ruse. If growth picks up without a fall in unemployment, then it's fair to assume King was right and there was little fat in the pre-crisis figures. The economy, as a result, would have a long way to go before rates need to rise. If unemployment declines more quickly, then the recession was the economic version of a painful workout and rates will be on the way up much sooner. The sorry truth probably is that Lord King was deceiving himself and the rest of us. Growth across the first seven years of the millennium was more flab than muscle. There was an unsustainable boom, trend growth is weaker than thought and the nation will have to accept a less exhilarating period ahead. With that will come difficult decisions about the NHS and pensions, for a start. After all, Britain was in relative decline between 1950 and 1979 - a period in which Germany and France overtook the UK in terms of GDP per person and the US stretched its lead. Then came North Sea oil, followed by Big Bang and, finally, the UK debt explosion. The combination of mini-booms helped move Britain back above France and Germany in output per head by 2007. George Osborne must now be praying for another miracle, albeit something more lasting than a debt binge. Fracking or a new idea from the tech wizards on Silicon Roundabout appears to be the latest hope. Unfortunately, while the longer term picture makes our current predicament seem less awful, it make our future prospects more bleak. Like the Chancellor, we should all be holding out for a miracle or we'll have to settle in for a more sedate period of growth.