There is No Economic Growth. We’re in a Deep Recession

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.