For the first time in its history, the Office of National Statistics (ONS) has used estimates of proceeds from charities, illegal drugs, and prostitution in its economic assessments of the UK – leading Gross Domestic Product (GDP) during and after the recession to be revised upward.
The addition of each of these trades has seen a 0.1 per cent increase each year in GDP between 1997 and 2012 and led ONS to suggest the recession actually ended earlier in the third quarter of 2013, rather than earlier estimates that placed it in the second quarter of 2014.
The study also showed that the economy shrank by up to 6 per cent in the recession, rather than the previous ‘peak-to-trough’ estimate of 7.2 per cent.
These revisions mean that between 1997 and 2012 the economy was on average £50bn larger (4 per cent) than previously thought each year.
“Despite the wide ranging improvements underpinning the new estimates, the broad picture of the economy has not changed much,” said ONS chief economist Joe Grice.
“Although the downturn was less deep than previously estimated and subsequent growth stronger, it remains the case that the UK experienced the deepest recession since ONS records began in 1948 and the subsequent recovery has been unusually slow,” he said.
The changes to the way ONS gathered its data where prompted by a change in international standards that has seen many countries include illicit trades, research and development costs and charities in their estimates of GDP.
The data estimates that drugs and prostitution alone were worth £141.7bn to the UK economy during this 15 year period, the ONS said.