Fiddling the GDP Figures?

The biggest commitment our Labour Government made to us before the last election was that growing the economy would be its number one priority. However, can we actually trust the GDP figures Labour will use to claim the success of its policies? In this short piece I touch on just two of the many possible reasons why our GDP figures may not be quite as reliable as our Government and most mainstream media economists would like us to believe.

Helpfully, on August 19th 2025 the Office for National Statistics (ONS) issued an explanation of why GDP figures were so important, detailing several “improvements” it had made to strengthen the accuracy of its GDP reports.

In its news brief the ONS informed us:

Gross Domestic Product – better known as ‘GDP’ – remains the leading internationally-recognised indicator of economic activity and growth. In common with other countries, the ONS updates methods and sources we use to measure the GDP of the United Kingdom.

Today we have published updated estimates of GDP from 1997 up to 2023, which will be published in the ‘Blue Book’ and adopted in our headline figures at the end of September. While the size of the economy now captured by GDP has increased, the long-term pattern of growth is broadly unchanged.

The key section of the exciting ONS update is probably this one (I have highlighted in bold what I believe to be the most important part):  

We have also made some important improvements to the way we measure the activities of large multinational companies. Previously, if a UK-based company had a factory manufacturing products abroad, we would often record this manufacturing as a foreign-based activity and treat the products sent back to the UK as an import while not recording the products sold as exports to other countries. However, following a pilot two years ago, we have now worked in partnership with multinational companies in the pharmaceutical sector to ensure their output around the world is being recorded more accurately. 

This work has had the effect of boosting pharmaceuticals and the manufacturing sector as their directly owned production abroad now counts towards UK GDP.

Now I admit that I’m not an economist like all the clever, highly educated ‘experts’ who fill our media with their well-remunerated wisdom. But it seems to me that, with this change, if a UK company were to close its UK factories, throw hundreds or even thousands of workers on the dole and instead manufacture its products abroad to import them into Britain, the brilliant number-crunchers at the ONS would consider that this has not in any way reduced our GDP, even though less stuff would be made in the UK. Perhaps the ONS doesn’t have a dictionary and thus is unaware of the meaning of the word ‘domestic’ in Gross Domestic Product?

But even worse, a disaster such as a few closed factories and many more unemployed British workers might actually register with the ONS as an increase in GDP, as the Government would have to borrow more money to pay the unemployment benefits for those workers. Taking this to its logical (or should that be illogical?) conclusion: if mad eco-zealot Ed Miliband succeeds in his Messianic mission to completely destroy British businesses and hundreds of thousands of British jobs by forcing us to pay the highest energy prices in the world in order to save the planet from ‘global boiling’, the new ONS method of including products manufactured abroad by British companies as part of measuring GDP would tell us that the economy is growing healthily.

It surprises me more than slightly that none of our mainstream-media economics ‘experts’ seem to have noticed this total absurdity.

But this may not be the only problem with our GDP figures.

By muckspreading a whole host of increased costs on business – higher NI, increased business rates, higher minimum wages, more draconian employment laws and so on – I believe that our ‘going for growth’ Government has almost effortlessly managed to reduce the size of the economy. In fact, I suspect that we’re actually now in recession. Let me explain. Labour claimed that with a pathetic supposed 0.3% growth in the second quarter (April, May, June) of 2025 Britain still had economic growth. This claim that the economy grew by 0.3% was dutifully reported by most, if not all, of our mainstream media economists. But in the second quarter of this calendar year, the UK public sector borrowed £57.8 billion. This is £7.5 billion more than the same period in the previous year. In the same period the UK GDP was probably about £740 billion.

So, if our government increased borrowing by £7.5 billion compared with the same period last year, that £7.5 billion is about 1% of the £740 billion GDP for the quarter. This means, as far as a fool like myself can see, that our government increased borrowing by 1% of GDP, then wasted this money by giving it to our useless, work-from-home, do-nothing, deliver-nothing public sector, and yet managed to achieve only a 0.3% increase in GDP. Thus simple arithmetic would suggest that the real economy, once you take out the increase in Government borrowing and spending of 1% of GDP, actually shrank by 0.7%.

It surprises me more than slightly that none of our mainstream-media economics ‘experts’ seem to have noticed this unfortunate possible interpretation of our Government’s growth story.

David Craig is the author of There is No Climate Crisis, available (for now) as an e-book or paperback from Amazon.