New data shows UK has fared better through pandemic than thought

Throughout the pandemic, the UK has been mocked as the sick man of Europe, unable to control the virus or the economic damage it has caused.

Stats from the International Monetary Fund show the country suffered the deepest recession of all the G7 nations last year, a point that Labour’s Shadow Chancellor Anneliese Dodds has revelled in.

But a paper published by the Office for National Statistics now suggests the UK fared better than initially thought.

Safe hands? A new  paper published by the Office for National Statistics suggests chancellor Rishi Sunak (pictured) has handled the pandemic better than initially thought

Gross Domestic Product (GDP) as a measure of an economy has its pitfalls, yet remains the best available. Nevertheless, each country calculates GDP in different ways and the ONS has found the UK’s method made the economic slump look worse than its rivals.

The problem is how the country calculates activity in the public sector. Unlike the private sector, where activity can be calculated by adding up what people paid for goods and services or a company’s turnover, the population does not pay for public sector services.

As a result, a more nuanced calculation is required, using how much the Government spent on services such as schools and the NHS as well as adding up the amount of operations and teaching hours that take place. 

This is noble and proficient but other G7 countries like France do not bother with such detail.

Shadow chancellor Anneliese Dodds claimed the UK had ‘the worst recession and the worst growth of any major economy last year’

So while their public sector GDP has remained stable or grown in the figures, ours has fallen as schools have shut, pupil hours collapse, and accident and emergency and operation wings go unused.

Rob Kent-Smith, economist at the ONS, said: ‘With schools closed and many non-urgent procedures delayed, this means we recorded a big fall in the output of UK public services during the early stages of the pandemic.

‘However, in other countries these data are not readily available, and so they estimate the output of their public services by looking at how much money was spent on them, or the hours worked by those providing them.’

Kent-Smith goes on to note there is more than one way of measuring output.

On a ‘volume’ measure, UK GDP fell by more than the rest of the G7. But on another measure – more in line with how GDP is calculated in the rest of the G7 – the UK is in the middle.

The ONS stats show the UK performed better over the period than Canada, Italy and Germany, with only Japan, France and the US doing better.

Despite the ONS fact checking, Labour maintains the Tories are to blame for the country’s economic malaise, with leader Keir Starmer saying yesterday: ‘Britain has had the worst recession of any major economy’.

His comments followed those made by Dodds who tweeted: ‘We had the worst recession and the worst growth of any major economy last year. Covid closed much of our economy, but the Conservatives crashed it.’

But Tory MP Iain Duncan Smith said: ‘We are way more honest than other developed countries. Let’s not beat ourselves up by comparing apples with pears. 

‘The Labour Party are completely wrong. It’s not as bad as Anneliese Dodds makes out to be. She’s financially illiterate.’

The ONS also stressed that the make-up of the economy and our fast vaccine rollout means that once lockdown is lifted, the UK will recover faster than the other G7 economies.

Consumer spending is a major driver with Britons spending heavily on eating out, going to the pub and visiting the theatre or going to football matches.

Kent-Smith added: ‘Consumer spending makes up a larger share of GDP than in many other comparable countries, and a higher share of that consumer spending is on services such as hotels, restaurants and leisure that have been particularly hit by the lockdown restrictions.

‘This is another major reason why the fall in UK GDP has been larger. It has been a big fall during the pandemic but it should also mean a bigger recovery.’