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More or Less

Counting Covid’s impact on GDP

More or Less

BBC

News Commentary, Science, Mathematics, News

4.63.7K Ratings

🗓️ 23 January 2021

⏱️ 9 minutes

🧾️ Download transcript

Summary

GDP figures for the period covering lockdown appear to show that the UK suffered a catastrophic decline, worse than almost any other country. But as Tim Harford finds out, things aren’t quite as bad for the UK as they might seem - though they might be worse for everywhere else. Also, alarming claims have been circulating in the UK about the number of suicides during lockdown. We look at the facts.

There is support for the issues discussed in the programme at help.befrienders.org

Presenter: Tim Harford Producers: Nathan Gower and Chloe Hadjimatheou

(Robots work on the MINI car production line at the BMW plant in Cowley, Oxford, UK. Credit: Tolga Akmen/ Getty Images)

Transcript

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0:00.0

Hello and welcome to more or less on the BBC World Service, with a program that examines

0:05.7

and unravels the numbers that underpin the world, and I'm Tim Harford.

0:10.0

There's no doubt that the pandemic has caused a global economic crisis, as well as a public

0:15.6

health crisis, but the impact has varied around the world.

0:19.7

The most straightforward way to measure an economic hit is by looking at GDP, Ghost Domestic

0:24.8

Product. You can measure GDP by adding up everyone's income or everyone's spending, or

0:30.5

the market value of everything that's been produced, and in principle all three methods produce

0:35.7

the same number. In a typical recession, GDP falls by a percentage point or three, but during

0:42.9

the height of the first lockdown, the second quarter of last year, GDP dropped by nearly 14%

0:49.3

in France, 7% in Denmark, 19% in Spain, economic catastrophe. But one country's economy seems

0:59.1

to have performed worse than almost anywhere else, the UK's. In the same period, its GDP fell

1:06.4

by about 20%. I spoke to Simon Brisco, director of the Data Science Company, the Data Analysis Bureau.

1:14.3

Firstly, it can be put down to genuine economic response. Britain has a disproportionately

1:22.8

large service sector, so arts, cultures, entertaining sandwiches, pubs, the whole lot, went into

1:30.3

lockdown so money couldn't be spent. And secondly, there was a particularly large hit from the fall

1:38.7

in what is called government output, primarily schools and hospitals. But hang on, remember that

1:46.4

GDP is supposed to be a measure of the market value of what's produced. Most schools and hospitals

1:52.9

provide free services paid for out of taxes, so that makes calculating their market value and thus

1:59.6

GDP rather tricky. And here, the plot thickens. You mentioned schools are closed, a lot of hospital

2:08.3

operations were stopped. So how does that feed into UK GDP figures? Well, the output of the

2:19.8

government sector in the year to the second quarter of last year fell by 23% in the UK.

2:27.2

Now, there was only France and I think Hungary that fell by more than 10%,

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