QUESTION: The Economist said that Britain is not in a recession and everything is fantastic, because Labour is in power. Socrates showed high volatility in UK GDP this year, and it looks like things are shifting in October. Is GDP a valid indicator anymore?
EK
ANSWER: No, GDP can be easily manipulated. The most common way to measure GDP is by adding up all the spending in the economy:
GDP = C + I + G + (X – M)
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C = Consumption (spending by households)
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I = Investment (spending by businesses on capital goods)
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G = Government Spending (on goods and services)
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(X – M) = Net Exports (Exports minus Imports)
Yes, the Economist will NEVER say the slightest thing positive about Trump. They are an extremely biased left-wing propaganda magazine these days. When I used to advertise and would even meet with senior staff back in the ’80s, they were not so extreme left. This is what they wrote:
“Some of the doomsaying is overdone. Britain is not in a recession. Critics say the government crushed the private sector with tax increases in 2024, but the economy grew faster in the first half of 2025 than any other in the G7 group of big rich countries. Retail sales have been solid; unemployment remains low; and the service sector is strong. Britain’s structural strengths—its best universities, the City of London and the English language—are enduring. In many ways, including its birth rate and artificial-intelligence research, Britain can look to continental Europe and count its blessings.”
I have written before that we thoroughly examined all the economic statistics back in the 1980s and 1990s. What we discovered was shocking. One of the staff came to me and said that she had found an anomaly in the GDP, that they were counting all government employees TWICE in the GDP. They count total personal income and then total government spending, but do not subtract government spending on employees. I called the head of BEA and asked if they had to be backing this out somewhere. I was told he would get back to me. After weeks had passed, I called again, and he said, ‘No comment.’ I believe that has been corrected.
Nonetheless, if 50% of the private sector laid off its workers and the government hires them, the GDP will not decline. So between March 2024 and March 2025, there was an increase of about 6,800 people on a headcount basis (about 1.3%). Starmmer came to power in July 2024. As of March 31st, 2025, the UK Civil Service headcount was 549,660, with full-time equivalent (FTE) at about 516,150.
The more people Starmer hires, the greater the GDP growth. That is an illusion since taxes rise, and it is reducing actual productivity for government employees. DO NOT add to the nation’s wealth any more than hiring a live-in maid increases your household income.