Surprisingly Upward revision to UK GDP for 2021 It revived debate about the procedure and precision in measuring economic aggregates. And with this The UK is moving from being last in the recovery of large economies to overtaking GermanyAlthough it still lags behind France, Italy, Japan, Canada and the United States, it achieved a pyrrhic statistical victory.
“Orwell said: “He who controls the present controls the past, and he who controls the past controls the future.” Will Germany, France and Italy conduct a similar review and thus all economies will be much better off than in 2019? The rest of the European economies are likely to conduct a similar review, and in the end the result will be the same. Weak recovery as inflation rises.
In fact, the Office for National Statistics (ONS) warns: “The UK is one of the first countries in the world to revise GDP estimates for the pandemic period using a more detailed framework, meaning other countries could also change their estimates in due course.” Later date. “This is important to take into account when comparing the UK to other countries, and our position in international comparison is likely to change once other countries fully encounter their own data sets over time,” the ONS director explains to CNN.
The problem with these sudden and large upward revisions to GDP, such as those seen in the UK, is that they leave statistical authorities in a very bad position.
A systemic change of this magnitude should not be published without generalizing it to the rest of the countries.
Revising the midpoint is completely normal. A massive generalized increase that reduces the decline in 2020 and increases the recovery in 2021 with the analysis of better margins in the services sector and increased activity cannot be deployed with great fanfare when the rest of the similar economies have not embraced it. In reality, It makes the comparison useless and fuels controversy over official data.
Scandal in the United Kingdom
The upward revision to UK GDP for 2021 (already revised) has become a finger-pointing scandal. For some, this is manipulation, for others a way to “excuse Brexit”… For the Tories, this is a “success” (what a success, on the other hand, to revise the past à la Orwell and follow behind the G7). For Labour, it is a “statistical hoax”. The truth is that It is unacceptable for a country with the wealth and potential of the United Kingdom to live in the current situation, even reviewing the past.
This review is not only a debate across the UK and more than a surprise, but – if correct – it 100% dismantles the fallacy that inflation is due to supply chains, as the entire statistical review reflects a more than amazing improvement of these factors in the period Review it. Hence, the revision was minimal in the entire series except for two key quarters, boosting GDP. The worst is, By making such an upward adjustment in 2021, it leaves the development of the economy in 2021-2023 worse and closer to recession.
In 1968, Robert Kennedy said that GDP “measures everything except what makes life worth living.” From Ajay Shah or Arvind Subramanian to Wei Chen, Herman Daly, Diane Coyle, Charles Bean, or Sarah Arnold, there are many economists who question the way GDP is calculated. Many do so to criticize its overvaluation, and others say, quite commonly in some World Economic Forum discussions, that it does not adequately reflect a country’s wealth. From The Economist to the World Economic Forum, there is a whole list of journalistic criticisms of GDP, which join the economics literature. Although it is neither a perfect nor less accurate measure, it is important to emphasize this It is the best possible measure, although there is no doubt that GDP is a measure that gives a more moderate view of the economy in difficult times as it can be increased using public spending and debt.
GDP is a key measure, because… Almost all government performance ratios are measured in relation to this GDP. Controversy has already arisen over the addition of illegal activities, which are difficult to measure accurately, and we already know that it is a relatively easy indicator to distort by increasing debt and spending more.
The UK Office for National Statistics is making a huge mistake in projecting systematic change of such magnitude that comparison with others is impossible, and it reopens the debate about whether official GDP figures are correct or distorted.
The sad thing is that in the propaganda close to the Spanish government this bad decision by the UK National Statistics Office is seen as The way to hide the poor performance of the Spanish economy, which follows Europe’s lead in recovery. They know that if the GDP were revised with a systematic change like this, it would be invalidated by comparison with other countries around us that have not done the same revision, and that when all those in the EU do it, the result will be: very similar; One of the worst recoveries in the European Union. They also know that it will leave the 2021-2023 recovery in a worse place, as happened in the UK, and the economy closer to recession. They know the number will not be comparable. Don’t be fooled.
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