Gross trading profits earned by private sector businesses (excluding those in the financial sector) were virtually flat through 2000 and 2001 and, although showing signs of recovery in 2002, were just 6% above their 1999 level.

This equated to a reduction of one and a half percentage points in the average net rate of return on operating assets.

Given the degree of the global slowdown, profits held up relatively well in absolute terms and as a share of GDP.

And with the economy recovering from 2003 onwards, company profitability likewise improved, gross trading profits in 2006 being 32% higher than four years earlier and the net rate of return rising to 13.1%, compared with 11.2% in 2006 and above the long term average of around 12%.

Profits growth had already begun to slow before the onset of the 2008 recession. Crucially, however, profit growth remained positive in both 2007 and 2008, rising faster than inflation in spite of businesses facing periodic cost pressures from higher fuel prices.

By 2008 the net rate of return on capital had dropped back to 12.1% on average.

Source: ONS