You can almost sense the agonising among hardcore remainers, the howls of anguish. The Office for National Statistics (ONS) has revised the UK’s economic growth figures since Covid upwards. Instead of still struggling to reach its pre-pandemic high it seems that the UK economy in fact surpassed 2019 levels two years ago.
Previously, the ONS had estimated the economy in the last quarter of 2021 to be 1.2 per cent smaller than pre-pandemic. It now calculates that in fact it was 0.6 per cent larger. The ONS says its initial forecasts were compromised by the difficulties of calculating GDP during the pandemic.
Is there a bias which has led to the damage to the UK from Brexit being over-estimated?
The upshot of this is that instead of under-performing the economies of France and Germany since the pandemic (and Brexit, which took effect six weeks before the lockdowns began), the UK economy has now outperformed it. This was not, of course, supposed to happen. It was confidently forecast by the Treasury and by endless pro-remain think tanks that Brexit would damage the UK economy and leave us the laggard of Europe – as initial GDP figures suggested.
No-one should get carried away. UK GDP – along with the whole of Europe – remains sluggish. Europe’s economy has been pretty moribund since the 2008/09 crisis, in some cases shockingly so. Italy’s GDP in 2022, per capita, was 16.5 per cent lower than it was in 2008. Britain has not – yet, at any rate – been able to escape the cycle of low growth which has come to bedevil the continent. But it does put lie to the theory that Brexit was an act of self-harm which was going to damage Britain uniquely as the EU sailed off on its own to a brighter future.
The ONS’ revisions to UK GDP didn’t end in 2021, by the way. It has also revised economic growth in the first quarter of 2023 from 0.1 per cent growth to 0.3 per cent growth. This is very significant, given that this time last year the Bank of England was predicting that the UK would spend all of 2023 in recession and others such as the IMF forecast that the UK would be the worst-performing of any major economy this year. One has to ask: is there a bias in their assumptions which has led them to over-estimate damage to the country from Brexit?
It also has to be asked whether we place too much reliance on GDP figures. Greens want to do away with GDP because they complain it doesn’t take into account the health of the planet, and they would rather have no growth at all if it meant fewer carbon emissions.
But a more fundamental question is how good is GDP at actually measuring economic growth? When GDP is capable of shifting markets and influencing interest rate decisions, the number of revisions that are being made to the figures is alarming. We have had plenty of debate as to the methodology of inflation figures; we could do with a similar debate over GDP figures.
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