Drugs and Prostitution to be included in GDP

I have to admit I did a double take when I saw this in The Times today. In other countries (well, the Netherlands in particular) where prostitution and some drugs are legal, these activities are included in the calculation of GDP.

Philip Aldrick, writing in The Times 10th February 2014 reports that £10 Bn could be added to the UK economy if prostitution (£3 Bn) and drugs (£7 Bn) were included in GDP and the EU has ordered the ONS to include these activities in its estimates of UK GDP.

Although there has been widespread derision of the measure, the EU sees it as necessary to create a level playing field when allocating subsidies from its budget. In fact, it has been suggested that Greece's GDP could rise by as much as 2% if their black economy was counted in GDP. The effect on the UK's GDP would in fact be relatively trivial.

Mark Garnier MP, a member of the Treasury Select Committee, described it as bonkers and exactly the sort of thing a roomful of bureaucrats would come up with.

The story prompted a number of comments from readers not least from one who said: "If they can measure it, they should tax it" - well that's another story!