It has recently been found that the recent economic downturn was actually not as bad as believed. This is according to new figures that have taken into consideration the incomes that were earned through prostitution and illegal drugs.
The Office for National Statistics (ONS) has stated that the Gross Domestic Product shrank by as much as 6% when the recession was in full force. Although this is still a lot, the first estimates were actually that the percentage was 7.2%. These revisions have demonstrated that the economy was actually £50 billion larger than had been believed, which is 4% more. Additionally, it is believed that growth was not 0.1%, as previously thought, but rather 2%.
The changes in statistical methodology employed by the ONS now include money that is spent on weapons investment (research and development) and illegal spending on things such as prostitution and drugs. According to the ONS, these activities may be by and large illegal, they do contribute to the Gross Domestic Product. In May, data was released that showed that prostitution and illegal drugs brought in some £10 billion to the UK economy in the years between 1997 and 2009. Prices for girls in London vary from GBP 100 to GBP 400 and more, while drug costs are not easily available on Internet.
According to the new figures, the growth before the downturn in 2007 was actually 2.6%, which is much lower than the 3.4% that had been calculated before. In 2008, there was a contraction in the economy that wasn’t 0.8% as was previously believed, but rather 0.3%. Additionally, the decline that was experienced in 2009 was not 5.2% as first estimated, but rather 4.3%. Additionally, the growth that was experienced between 2009 and 2012 was actually much better than initially believed.
According to Joe Grice, chief economist at the ONS, the downturn is clearly less deep than had initially been estimated. Additionally, the growth was much better than believed. However, this does not take away from the fact that the recession was still the deepest since 1948, when the ONS first started to keep records. Additionally, it must be noted that the recovery has been incredibly slow, particularly when compared to forecasted projections based on historical data.