Britain’s economy is going to change abruptly and profoundly
in four months’ time – at least on paper. For the first time in 15 years, the
Office for National Statistics (ONS) will in September tear up the way it
measures the economy, to take account of new international standards and to
make the UK as comparable as possible with other countries. If the ONS’s preview
on Thursday was anything to go by, the results will be dramatic. Altogether,
the changes planned for September will add between 4 and 5 per cent to the
level of gross domestic product in 2009 – the most recent year for which the
ONS has calculated the figures so far. The path of real GDP growth is also
likely to change, although statisticians have not calculated that yet. Prostitutes
and drugs dealers (estimated to be worth £10bn) are not the only ones who are
set to play a bigger role in the economy. They will be joined by people who
build their own houses: the ONS thinks it will add £4bn to the economy. Bankers
will chip in too: the ONS will change the way it measures “FISIM” – the gap
between interest paid to and received from banks – which will add another £5bn
to GDP. On the other side of the ledger, some adjustments to the measurement of
investment and stock building will reduce the level of GDP by about £10bn. But
Thursday’s announcements are only the beginning. New global accounting
standards will also be applied to the national accounts in September. Under these
rules, research and development spending will count towards GDP, rather than
being seen as a cost of production, and building aircraft carriers and other
weapons will also add to the economy’s size. One of the biggest changes will be
in how savings are measured. The official figures will start to count future
pension rights as if they were present income.
OUR RELATED STORIES:
Reported in The Independent:
ReplyDeletehttp://www.independent.co.uk/news/business/news/sex-and-drugs-and-cigarettes-trigger-italys-economic-revival-9797083.html
"Sex and drugs and cigarettes trigger Italy’s economic revival:
Earnings from prostitution, narcotics and black market cigarettes and alcohol all helped stop the eurozone’s third- biggest economy shrinking. This meant Italy escaped, by the skin of its teeth, having its third recession in the last six years."