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BBC reported the UK's Office for National Statistics considered for the first time the contribution of the hidden-economy to the GDP:
For the first time official statisticians are measuring the value to the UK economy of sex work and drug dealing and they have discovered these unsavoury hidden-economy trades make roughly the same contribution as farming and only slightly less than book and newspaper publishers added together.
Illegal drugs and prostitution boosted the economy by £9.7bn equal to 0.7% of gross domestic product in 2009, according to the ONS's first official estimate.
A breakdown of the data shows sex work generated £5.3bn for the economy that year, with another £4.4bn lift from a combination of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines.
Joe Grice, chief economic adviser at the ONS, said: "As economies develop and evolve, so do the statistics we use to measure them. These improvements are going on across the world and we are working with our partners in Europe and the wider world on the same agenda.
"Here in the UK these reforms will help ONS to continue delivering the best possible economic statistics to inform key decisions in government and business."
Alan Clarke, a UK economist at Scotiabank, said that although the government would not feel the benefit of illegal work in terms of income tax take, there would be a spending boost.
"A drug dealer or prostitute won't necessarily pay tax on that £10bn, but the government will get tax receipts when they spend their income on a pimped up car or bling phone."
Keeping with the theme, I can "estimatedly project" two things from the above:
- if GDP is to include hidden-economy and beyond-damnd-liers have free reign to estimate it as they see fit, don't be surprised when the estimated rate of inflation and consequently your mortgage rate will vary in no relation with the as-reflected-by-your-payslip-economy
- if hidden-economy is officially recognized but still not taxed, where's the incentive for others to run their business in the open?
SN mates, what do you make of it?
(Score: 3, Informative) by soylentsandor on Saturday June 07 2014, @06:33AM
If you aim to measure and analyze an economy, it's not a great idea to turn a blind eye toward a sizable sector of it simply because it doesn't have government blessing.
That said, this of course could very well be used to paint a prettier overall picture of the state of the economy. There is bound to be government pressure to do so. Let's hope they don't overdo it.
Business is about making a profit. Where or whether your chosen sector ends up in the ranking of some statistics bureau shouldn't matter to anyone. The tax men will keep making an effort to convince businesses to pay their taxes as they always have, so I really can't see this make any difference in that regard.
(Score: 2) by tomtomtom on Monday June 09 2014, @12:36PM
Indeed - the reason they are doing this is because these sectors are (more) legitimate in other countries (particularly other countries in the EU like the Netherlands or Portugal) and it makes comparisons between economies unfair if certain economic activity is inconsistently included in the measurement of one economy and not in another.