Only in the latter case would it mean that spare capacity in the economy will have been increased.) If, on the other hand, there really has been more growth than the GDP accounts suggest – more in line with the rise in employment and the trend decline in unemployment – then capacity probably remains pretty tight.
In that case, upward pressure on inflation remains a distinct possibility. Alternatively, if both sets of data are correct, then productivity actually has slowed down considerably. But if that is true, unless it is a temporary phenomenon, then potential GDP growth is not 3 per cent or a bit above any more.