Contribution of drug dealers and prostitutes to the UK economy will boost GDP figures by £10billion ($16.7 billion) according to The Financial Times. In September, the Office for National Statistics (ONS) will include prostitution and narcotics sales in its official Gross Domestic Product (GDP) statistics. According to the ONS, in 2009 sex work generated £5.3billion for the economy, with another £4.4billion lift from drugs sales.
Experts calculated that there were 60,879 prostitutes in the United Kingdom in 2009, who had an average of 25 clients per week – each paying on average £67.16 per visit. Details on drugs showed there were 38,000 heroin addicts living in the UK, so the sales of this kind of drug were 754 million pounds.
Overall, the 2009 GDP is expected to add 33 billion pounds, or a bit over 2% to GDP. Apart from the shady economy, this method will include, for example, private construction of houses by the British (statisticians will estimate how much these people would pay if they bought houses from realtors). The figures for 2010-2013 have not been reckoned yet.
The EU suggested that its members should take into account all illegal transactions but only by agreement of the parties. Some European countries have followed the recommendation. These are Estonia, Austria, Slovenia, Finland, Sweden, and Norway.
Last year, the US implemented the GDP calculation reform, thanks to which the indicator expanded by one trillion dollars. According to the new methodology, Research and Development is considered as investment whereas they were included into operating costs (thus, they were out of GDP). Since 2013, Russia has planned to add money which house owners would pay if they rented it. These changes have not been put into action so far.
Despite the fact that the GDP growth due to additional factors looks good only on paper, it can exert influence on the real economy and financial sector indirectly. Bigger GDP improves the ratio between this indicator and the public debt that raises investors’ sentiment.
