A £10 billion step towards recognising the size of the UK shadow economy

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As many papers note this morning, it's been officially decided that the earnings of drug dealers and prostitutes should be added to the measurement of UK GDP, increasing its total by an estimated £10 billion a year.

Without welcoming the illicit activities of either group I welcome this recognition of their economic activity, but there is a long way to go as yet. Last year I revealed as a result of an FoI request that the ONS thought that the UK shadow economy was just 1.7% of UK GDP. My latest research into the shadow economy suggests that there may be £100 billion of unrecorded sales in the UK economy - or 10% of all UK trading in 2011/12, the year to which the research relates.

The recognition of £10 billion of that trading is welcome, but, I suggest, there is a long way to go as yet before we get UK Treasury, HMRC and ONS officials to recognise the full extent of this problem, and this matters. Whilst a blind eye is turned to economic crime that activity undermines legitimate and honest UK trade at cost to us all. That's why change is really needed. Collecting the tax owing would help too. It really is for both reasons very hard to understand this collective refusal to act, whose existence if confirmed by this latest decision: after all, the activities of drug traders and prostitutes have been known about for a very long time but there's been a collective refusal to recognise them to date. Now we just need to recognise the rest of the shadow economy.