We’re told that, although the UK’s growth rate in the last quarter was an anaemic, almost invisible to the human eye 0.4%, the UK still has the highest growth rate in the G7 so far this year. And this mantra has been repeated by our rulers, the mainstream media and most supposed ‘economics experts’. But vaguely remembering some of the things from my MBA Economics course, I believe this growth story is complete nonsense and that the UK has been in recession ever since the first Reeves-Starmer tax-raising, job-destroying budget. As none of our politicians, economists, commentators and journalists seem to realise this, I’ll explain why it is the case in simple numbered steps so even a politician or economist might be able to understand.
Step 1: We’re told that the British economy grew by an ‘amazing’ 0.4% in the latest full quarter.
Step 2: The UK GDP is about £3 trillion. So the GDP for one quarter would be about £750 billion (£750,000,000,000).
Step 3: Growth of 0.4% on this £750 billion would be around £3 billion (£3,000,000,000).
With me so far?
Now let’s look at just three areas where this £3 billion might have come from.
Area 1: The growth in public-sector employment.
Step 4: There are around 33,000 more public-sector employees (I won’t call them ‘workers’ for reasons you can probably guess).
Step 5: Let’s assume the average annual cost of each employee is about £50,000 – that includes salary, social costs, pension contributions, expenses and use of any equipment or office space.
Step 6: Then the total cost of these extra 33,000 employees in one quarter would be around £412 million.
Area 2: Now let’s add in the increase in the number of illegal migrants
Step 7: There are about 46,000 more illegal migrants in Britain than a year ago.
Step 8: Let’s assume each illegal migrant costs us about £40,000 a year – accommodation, spending money, food, free phones, legal costs, medical care, dental care, entertainment and anything else they are given.
Step 9: Then the total cost of these 46,000 extra illegal migrants is £1.84 billion a year – £460 million per quarter.
Just these two areas of increased public-sector spending give us slightly under £900 million of the £3 billion supposed GDP growth in the most recent quarter.
Area 3: Public-sector wage increases
But there’s a third area of increased public-sector spending – the increase in wages (excluding bonuses) for Britain’s 6.1 million public-sector employees.
Step 10: Total public-sector wages (excluding bonuses) are well over £250 billion (£250,000,000,000) a year.
Step 11: Between 2025 and 2026, average pay increase in the public sector was 6.3%. (It was only 2.9% in the private sector.)
Step 12: So, 6.3% of £250 billion gives us over £15 billion. Divide that by four to give the spending increase on public-sector wages for one quarter and you get £3.9 billion.
Step 13: Adding these three areas, the cost of 33,000 more public sector employees plus the cost of 46,000 more illegal migrants plus the cost of public-sector wage increases gives us somewhere around £4.8 billion of increased public spending for the most recent quarter. Yet the UK economy’s supposed 0.4% growth only gave around £3 billion.
What does this tell us?
Step 14: I have only covered three areas of increased public spending. You could go further and include the cost of benefits for the 83,000 increase in unemployment, the benefits for the 30,000 increase in NEETS (young people not in education, employment or training), the benefits for the 260,000 increase in the number of people claiming to be disabled and the subsidies paid to major industrial energy users to try to give them some limited protection from Ed Miliband’s catastrophic energy policies which have made UK energy prices three to four times more expensive than energy costs in countries like China and the USA
Step 15: So, I humbly disagree with all the experts who claim the UK economy grew by 0.4%. Instead, I suggest that the UK economy didn’t grow at all during the last full quarter. In fact it shrank. But the government managed to create the chimera of growth by wasting billions on illegal migrants, the bloated, ever-increasing, ever-overpaid public sector and benefits for those who, for whatever reason, weren’t working.
Step 16: Where did all this extra money come from? Did it come from increased tax revenues due to the flourishing growth in the private sector which Keir Starmer assured us was his top priority? Nope. More than 100,000 thousand private-sector employees (145,000) lost their jobs in the most recent financial year as tens of thousands of businesses laid off workers or even went bankrupt. So there was a contraction in what one might call the ‘real economy’. The extra money creating the illusion of economic growth came from the government borrowing about £42 billion in the second quarter of 2026 when the economy supposedly grew by £3 billion. Sadly, much of the £42 billion borrowed went to paying off the interest on the UK’s total debt of about £2.98 trillion. But there was a little left over to allow the government to increase spending on things like more illegal migrants, more public-sector employment and wage increases, the increase in the numbers unemployed and supposedly disabled and the energy subsidies.
All these increases in spending are not signs of economic success. They are the result of failure – failure to control public-sector wages, failure to control the number of public-sector employees, failure to control Britain’s borders, failure to encourage job creation and failure to provide energy at a similar cost to most of Britain’s competitors. But these failures have resulted in more money entering the British economy from more borrowing, thus apparently increasing GDP and so allowing our failing government and economically-illiterate sycophantic media to claim the British economy was growing.
Conclusion
I’m not an economist. So you can accept or dismiss everything I’ve written above. But it seems to me that, by applying just a little common sense and some simple arithmetic, you reach the inevitable conclusion that there wasn’t any real economic growth at all. In fact, I believe we’ve been in a deep recession in the ‘real economy’ ever since the first Reeves-Starmer job-and-business-destroying horror budget and Labour’s migrant-and-public-sector spending spree.
David Craig is the author of There is No Climate Crisis, available (for now) as an e-book or paperback from Amazon.
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The logic of your article seems inescapable. Sadly the government doesn’t seem to have any rational people in its ranks.
Just been listening to a Union boss at the Labour Party conference say employment rights have no bearing on employment rates. When you’re up against this level of stupidity you can only despair. He’s about to join the board of the Bank of England as a lay (unqualified) advisor….
This is a good article! For over 20 years successive governments have combined borrowing and spending with mass immigration to create the illusion of prosperity as measured by GDP. The reality is that the UK is overwhelmed with debt and much poorer. And even the highly flawed metric of GDP reveals that in real inflation adjusted terms GDP per capita is no higher than it was 20 years ago. If the people who prepared and presented the UK’s accounts operated in the private sector, they would be behind bars for fraud.
It feels intuitively wrong to count the public sector, welfare, migrants and such as an asset counting towards GDP, they seem more likely liabilities, in every sense of the word.
To my none economic trained mind, GDP should be a measure of productive output, something that improves value, not that bleeds tax revenue for no tangible benefit.
Likewise, how can borrowing be seen as anything other than a liability, putting the country deeper into debt, and who can ignore the £100 billion + annual interest on the national debt?
I didn’t study economics, I’m not an economist, but it all seems odd.
Thank you for telling the truth. It has become more and more difficult to find it in our upside down world.
I’ve been arguing this point on The Spectator website for a few years each time they produce the GDP figures. Our ‘growth’ comes from increased spending on an unproductive public sector and the ‘human rights’ industry that has been built around illegal and mass immigration.
Is it abuse to call this article (and all the comments so far) a tsunami of tripe? I know that such deranged hatred of all things public sector is typical of certain extremist US online outlets but here it is, turning up in the Daily Sceptic, providing a stark contrast to the many deeply researched and convincingly argued articles in this publication that I have enjoyed and learned from over the years. What is Toby Young thinking of? And what sort of readership is his baby now attracting?
I am not an economist but pray tell why you say that. All I can do is observe, the real inflation rate running much higher and cumulatively making us poorer. More public sector workers draining off money from the ‘real’ workers, more people on more benefits, makework for companies to comply with labyrinthine info, increased borrowing to prop up spending. I don’t know what counts a GDP but I none of these is real productivity.
Still silence …..
You ask” And what sort of readership is his baby now attracting?”. My answer – “intelligent people who don’t believe everything they are told by the BBC and other economically-illiterate media”.
But please explain to us how borrowing billions to pay for public-sector pay rises, more civil servants and hundreds of thousands of illegal migrants represents real economic growth.
I’d not go so far as to call it tripe, but I do think “publicsector” needs some more differenciation – is our binman as useless as our MP?
Your binman is probably in the private sector contracted by the public sector (council).
Why do you say that, the article seems reasonable to me? – it’s not particularly attacking of the public sector, there are many necessary jobs performed by that group, however when it comes to overall economic factors, they are a cost to our economy, not a source of income / growth…
I’d put it more simply, If borrowing is higher than growth then it ain’t growth.
Growth in deficit and debt!
If you plot the reduction in the economy against the increase in unreliable generations and other Net Stupid Zero measures you should find a good correlation. As you will do for most countries afflicted by the NSZ mental disease such as Germany.
I disagree on one point – the rest nails it.
in my view we have been in recession since Thatcher left Downing Street and the drive went out of good economic government. Bland Major, then Blair/Brown wrecking crew who inherited her legacy, promised to continue it and did so for a while, but then Labour does what Labour is and the urge to spend, tax, borrow, print money was irresistible.
I endured the pre-Thatcher years… highlights: 22% inflation, 16% mortgage rate, bottom tax rate 35%, top 83% + supertax of 15% on unearned income, 52%/42% corporation tax depending on company size, massive debt, high bond yields, IMF called in in 1976. Strikes. Blackouts. Rising unemployment. People emigrating in droves.
Now those years are back.
Since 2024 Labour has reverted to full Old Labour, the policy to make us a quasi-Communist State with a command economy.
GDP is a hopelessly inaccurate metric usually revised down retrospectively and easily manipulated – which is why it is liked so much by the ruling mobsters.
GDP per capita is better, but it is contingent on the GDP number being dependable, which it isn’t.
GDP includes Government spending… Read more »
Not sure the “capita” is dependable either.
I don’t believe there has been any growth in the British economy since BB – Before Bliar.
The idea that borrowed money equals economic growth is beyond Orwellian but that’s pretty much where we are today.
… plus printed money.
Our Government(s) need a lesson from Martyn Lewis – “credit card” debt – “pay it off in full”
whilst simplistic and recognising we all sometimes rely on borrowing, to do it as a strategy month after month is nonsense. The magic money tree doesn’t exist. Stop buying stuff you can’t afford, don’t pay yourself or anyone else what you can’t afford – it’s simple isn’t it?
Mrs T. was the first and last to act on this obvious truth.
Well said stating the (to anybody with eyes to see and half a brain) bleedin’ obvious.
Torturing statistics is not against the ECHR and the government indulges itself freely.
Another area of growth through public spending is the Personal Independence Payment which has grown from £16bn 5 years ago to 27bn and is forecast to rise to 41bn by 2030. This is often used to provide transport and leasehold cars are available with all maintenance and insurance included. 20% of new cars are now sold through this scheme. The luxury cars were removed last year but £35k Chinese models are available. In one case a 35k estate electric model has been supplied because there is a 3 yo boy who is not talking. Presumably being driven around with family will encourage him to speak.
As with police car investment in foreign cars, these Chinese imports will all go on the GDP tally.
Exactly – all value leaving our economy and growing someone else’s…
Note to Mods/Tech support – no sooner said than done.
Nice to see the latest article now has its own fixed link as well as being on the carousel. Onward and upward. Didn’t know it was called a carousel. You learn something every day, at least you do if you’re in the right company.
You’re welcome. We appreciate good feedback.
I’ve also noticed a small “person+cog” icon at the top-right of the comments, which let’s you find your previous conversations. Something I’d been missing on this site. Having to recall where you’d posted meant I lost track eventually .
I have been making this argument, occasionally on these pages, for a long time now. While Government spending on illegals itself doesn’t add to GDP, the people and businesses who benefit from this largesse then spend the money which does. This is one of the reasons why deceitful ministers like Starmer, Reeves and now Burnham and Healey don’t really want the situation to change because they can’t face the hit to GDP this would cause. It is the same for low income legal migration, increasing overall GDP while massively suppressing GDP per capita. Next we have the corrupt claims about average wages increasing above inflation, but only in the public sector, private sector wages are tanking.
All of this sits well with Burnham, because he likes to claim similar successes with Manchester but only by the same smoke and mirrors. The debt he added to the area, the loans made to support unviable development, the very limited claims of GDP growth, when for most people, disposable income plummeted.
But heyho, these are the ways that socialist governments have always fiddled the figures, whether red or blue socialists, Blair/Brown, Cameron/Osborne, etc etc survive by confusing the ordinary electorate with economic obfuscation.
You are correct. But GDP is value added in a specific period – month quarter, year.
It does not therefore show the value removed in the previous period by Government to fund its largesse. This is why retrospectively – even years later – GDP is frequently revised down.
The reality is that we’ve ve been in recession for years; all the time that additional sovereign debt accumulation has outstripped GDP annual growth.
With a fiscal deficit of 5% a year, any GDP growth less than 5% represents negative territory. The (convenient) misdirection comes from using GDP as a headline metric; it measures what is spent and therefore includes borrowing.