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Illegal sex and drugs trade to be included in calculating British GDP

Illegal sex and drugs trade to be included in calculating British GDP
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It seems Britain’s economy is doing better than reported, because of illegal activities.

The official gross domestic product (GDP) statistics are being boosted by including things like sales of drugs and prostitution.

Britain’s Office for National Statistics (ONS) said that the hidden-economy trade was worth almost 9.7 billion pounds (11.9 billion euros at current exchange rates) back in 2009, the most recent year for which it has done the calculations.

That total is based on estimates of how many prostitutes and drug users there are in the UK and their activities.

Prostitution is legal in Britain, but brothels, pimps and advertising sex are not, making estimating the number of prostitutes especially complicated.

By comparison, working out the volume of crack, heroin, cocaine, amphetamines, ecstasy and cannabis sold was easier, due to existing government estimates of the number of drug users.

Illegal economically productive activity now has to be included in how growth is measured under EU rules known as the European System of Accounts.

Britain and Italy will do so from September; Austria, Estonia, Finland, Norway, Slovenia and Sweden already include that information.

Although people engaged in such illegal work are unlikely to pay taxes on it governments do benefit from the money they spend on taxable purchases.

The changes cover far more than black-market activities, and in total are likely to add around four to five percent to the level of GDP as new businesses are added to the economy and the contribution of old ones reviewed, the ONS said.