Prostitutes and drugs will raise European GDP

Prostitutes and drugs will raise European GDP

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From 1 September in Europe concede new rules for calculating GDP. Now the GDP of the European countries will be higher due to the addition of new items, among them – the earnings of prostitution and drug smuggling.

C 1 September earnings of prostitution and drug trafficking will be taken into account when calculating the GDP of the European Union.

On September 1, 2014 in the calculation of annual GDP in all the countries of Europe will take into account activities such as the earnings of prostitution and trafficking of arms and drugs.

Reform of the system of calculating GDP is intended to “harmonize” its. The whole point is that over time, the structure of European economies is changing, and the official GDP figures do not reflect the real situation. There is another reason: in some European countries economic niches calculation was incorrect for many years.

Thus, the GDP of the European countries will grow by adding new articles.

It is estimated the UK Office for National Statistics, the inclusion of these items of calculation will increase GDP by $ 16.75 billion, or 0.7%. In I quarter of the UK economy added only 0.8%, so that the “dirty money” could help to significantly improve the official economic results. Even more useful would be a gain for Italy, whose GDP fell by 0.1% in I quarter, and for France, which has slipped into stagnation.

According to the estimates of the European Statistics Office, after it is reformed, the EU’s GDP will grow by an additional 2.4%. In I quarter of this year, the region’s economy grew by only 0.3%. Finland and Sweden will benefit from the reform more than any other country, receiving support in the amount of 4% and 5%, Austria, the Netherlands and the United Kingdom will grow by 3% and 4%, respectively.

Some experts believe that for this development is the desire to embellish the state statistics of European countries. After all, even if the debts are not calculated, then their sum is automatically reduced during the growth of GDP.

However, this assumption is refuted statistician Norbert Reth. “The new procedure for calculating GDP is not politically motivated and was not so from the beginning,” – said the expert responsible for the calculation of GDP at the Federal Statistical Office in Wiesbaden.

As for PETA and to its counterparts in other countries of the new process is to obtain an adequate opportunity to compare data worldwide. “There is no political motive was not here, even when the idea originated,” – said Ret.

This method of calculating GDP is discussed in the United Nations since 2003, and in 2008, the UN adopted the System of National Accounts (SNA) to the new criteria GDP estimates.

Australia was the first country that has implemented this system. United States Steel to count GDP under the new rules in 2013. Among European countries, only France and the Netherlands GDP is calculated in accordance with the new criteria. And since September 1 other European countries are also required to introduce new rules for calculating GDP.

embellish Statistics

However, the new rules will not affect the total amount of public debt.

Wolfgang Nirhaus, an analyst at the Institute for Economic Research in Munich ifo, showed it to the example of the calculations for the year 2011. “As for the quota of public debt, then the new method of calculation it hits the European average by 1.9 percentage points,” – says the publication Nirhaus “ifo Schnelldienst”.

For Germany, this figure will be reduced by 2.3 percentage points – from 80 to 77.7 percent of GDP. According Nirhaus, this difference is not significant.

However, it is understandable why the press so inflate the news that in the calculation of GDP will now take into account the earnings of prostitution, drug trafficking and arms smuggling. Experts do not see it as anything special. “The concept of our work, in principle, has not changed. So it was always: any economically significant items of income should be taken into account without any moral judgment, no matter what the film,” – says Norbert Reth.

Important items of income

The whole essence of the new rules is that from September 1 across Europe’s GDP will be calculated by the same rules.

If we talk about drug smuggling, thanks to the survey, which was commissioned by the Federal Ministry of Health, it became clear about what is the volume of drugs consumed in Germany illegally. Federal Office of Criminal Cases also know how many there are certain drugs on the black market.

As for prostitution, according to official data, in Germany employs 400 thousand prostitutes, of which 20 thousand men, the total annual income of 14.6 billion euros. Gross added value of this work is about 7.3 billion euros, net of expenses – rent places in brothels, condoms, etc.

Government spending on arms also included in the new criteria for calculating the annual GDP. “Of course, these amounts are considered always,” – says Norbert Reth. But whereas these costs are established as the consumption of the state, but now they are considered investments.

“Common standards are needed. Even if not everyone shares the criteria by which they are formed, for reasons of comparability, it is necessary to reach a unanimous verdict,” – adds Ret.

Besides the costs of research and development is now also qualify as an investment. Until now, they were listed in “prepaid expenses” that are “lost” in the production process, experts explain. Now the article “R & D costs” – research and experimental development – companies must qualify as gross investment in fixed assets.

Experts have long said that it is so necessary to estimate these costs. After all, the cost of research and development is an investment in the future, and this is an important point in the calculation of GDP under the new system.

While experts do not name specific number statistics, since before they must be officially published. “In general, the level of GDP in Germany is due to rise by about 3 percent, or 80 billion euros – said Norbert Reth. – Three-quarters of this amount is expensed to research and development and design.”

However, despite the fact that after the introduction of the new rules of the European Union advances will look more impressive on paper, the real situation in the economy is unlikely to change dramatically.

In addition, there are various approaches to the definition of the “black market” and the “shadow economy”. Some goods or services considered illegal in some states and legal in others.

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