Sep 1, 2023 - Economy & Business

Britain isn't the economic basket case it seemed

Illustration of the Union Jack flag with arrows in place of the stripes

Illustration: Sarah Grillo/Axios

The British economy has been the laggard among major advanced economies, struggling to return to its pre-pandemic trend even as other rich countries completed a rebound. Or so it seemed.

Driving the news: The U.K. government revised its estimates of GDP in 2020 and 2021, using more complete statistical methods. Friday's numbers put the economy's pandemic-era performance on par with G-7 nations rather than making it a straggler.

  • The nation's GDP in Q4 2021 was 0.6% higher than pre-pandemic levels, the Office of National Statistics said, not 1.2% lower as previously estimated.

What they're saying: "These revisions are mainly because we have richer data from our annual surveys and administrative data," the agency said. "[W]e are now able to measure costs incurred by businesses (intermediate consumption) directly and we can adjust for prices (deflation) at a far more detailed level."

Between the lines: Britain still faces major problems — including some of the highest inflation among rich countries, a troubled housing market and Brexit's continuing economic ripples.

  • But it is not the outlier in terms of overall growth, as official statistics made it appear at first glance.

The bottom line: The revisions remind us how much we don't know about what's happening beneath the economy's surface in real time.

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