Revisions to economic accounting rules, imposed by Brussels and due to take effect from September, will mean the UK’s output will increase by between 4% and 5% – or £70bn.
On Tuesday the ONS will unveil its latest estimates of the impact of the accounting changes for the years between 1997 and 2009. Figures for more recent years are not yet available.
The changes will mean drugs and prostitution will be included for the first time with weapons and R&D counted as an investment rather than a business cost.
However, the changes could also see net debt rise by £140bn in 2014-15, pushing it from 77.3% of GDP to 82% in the current financial year, according to the Office for Budget Responsibility.
Source: The Sunday Times
We Say:This is a great little story isn’t it?
Once upon a time there was a proud Isle, who (with the best of intentions) got itself into financial difficulties. The people in charge of running the country tried all sorts of real things to improve the position: taxing its people, fiddling interest rates, taxing overseas investors, and reducing benefits. When this didn’t change things quickly enough, they worried how the lack of growth of the Island’s outputs would look to its neighbours, and affect its credibility.
Then one day, some bright sparks in a beautiful ivory tower realised that simply changing the definition parameters, meant they could make big changes – without having to improve anything in reality. Hurrah!
So, when the bean-counters revisited the Island’s outputs, they added in some criminal activity and the nation’s sex workers (all previously looked down upon), and found it made a huge difference. And the Isle was so proud. And the drug pushers, pimps and sex workers were so very proud to feel included at last.
And they all (hopefully) lived happily ever after.
For more information, please contact London Accountants Berg Kaprow Lewis.