Surprisingly Upward revision of UK GDP for 2021 It revived the debate about procedure and accuracy 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 with high inflation.
In fact, the Office for National Statistics (ONS) warns: “The UK is one of the first countries in the world to revise its estimates of GDP for the pandemic period using a more detailed framework, meaning other countries could also do so.” change their estimates later. “This is important to take into account when comparing the UK to other countries, and our international comparative position is likely to change once other countries fully benchmark their data sets over time,” the ONS director told 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A systemic change of this magnitude should not be published without generalizing it to the rest of the countries.
Midpoint revision is completely normal. The massive overall rally that offsets the recession in 2020 and fuels the recovery in 2021 through better margins in the services sector and increased activity cannot be overstated when the rest of the comparable economies are not embracing it. In reality, It makes the comparison useless and fuels controversy over official data.
Scandal in the UK
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 “vindicate Brexit”… for the Tories “success” (what a success, on the other hand, to revise the past Orwell-style and continue at the bottom of the G7). ), for PT a “statistical trick”. 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, Hermann Daley, Diane Coyle, Charles Bean or Sarah Arnold, there are many economists who question the way GDP is calculated. Many of them do this to criticize the overestimation of this and others say, which is very typical in some WEF 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 critiques of GDP, which join the economic literature. Although it is not a perfect measure nor is it any less accurate, 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 by withdrawing public spending and debt.
GDP is a key metric, 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’s Office for National Statistics is making a grave mistake in pre-empting a systemic change of such magnitude that comparison with others is impossible, and reopening 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 GDP is revised with such a systemic change, it will be nullified as a comparison to other countries around us that have not, and that when everyone in the EU does, the result will be very bad. similar; One of the worst recoveries in the European Union. They also know that it will leave the recovery in 2021-2023 in a worse place, as it did in the UK, and the economy closer to recession. They know the number will not be comparable. Don’t be fooled.