UK economy stronger than first thought after drugs and prostitution boost GDP figures

The ONS now allows contributions to the economy from more 'colourful' corners of industry.

by Elizabeth Anderson
Last Updated: 30 Sep 2014

The Office for National Statistics (ONS) has made revisions to the way UK output is measured, and as a result there has now been an improvement in its historic performance.

Figures show that the UK economy shrank by 6% at the height of the recession in 2008-09, lower than the previous estimate of 7.2%.

This is because the ONS's GDP calculations now include contributions to the economy from prostitution and sales of illegal drugs. In total, the new inclusions contributed £10bn to the UK in 2009 alone.

For the total period of 1997-2012, these changes have raised the level of GDP at current prices by an average of £50bn a year (4%), but revisions to the average annual rate of real GDP growth are small, leaving it only 0.1 percentage points higher at 2%.

The ONS added that despite the slight improvement in the UK's output, it didn't change the fact that the UK's economy performed the worst in recent history.

'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,' ONS chief economist Joe Grice said.

The improvement may put added pressure on the Bank of England ahead of its latest meeting on interest rates later this week.

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