The UK economy is around 1.3pc larger than previously thought – a gain of £26bn – statisticians said yesterday, after a major revision of growth data from the past 20 years.

Britain is the world’s fifth-largest economy, with annual economic output worth $2.8trn (€2.5trn) last year, according to figures published by the International Monetary Fund in April.

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New analysis by the UK’s Office for National Statistics shows that average annual gross domestic product growth between 1997 and 2016 was about 0.1 percentage points higher than previously estimated, at 2.1pc.

The news has echoes of the so-called ‘leprechaun economics’ phenomenon in Ireland – an even greater revision of GDP data that suggested the economy here was 25pc bigger again than previously thought.

However, the revised UK figures do not change the broader picture of a marked slowdown in growth since the 2008 global financial crisis, and they capture only a few months of the period after the Brexit referendum in June 2016, which has weighed on the economy.

Moreover, growth since 2008 appears to have been even more reliant on domestic consumption rather than investment, something that was already a concern for British policymakers.

The growth upgrade was largely driven by reductions in estimates of how long assets such as buildings, computers and machinery can be used for, the ONS said, and comes as part of a three-year plan to improve the price data used to calculate GDP.

The economic output of Britain’s government and non-profit sector is based on the cost of the inputs used, and a faster depreciation of assets translated into an effective increase in annual spending and production, an ONS statistician said.

Changes in depreciation did not have the same effect on estimates of business output, which are calculated differently.

Reuters

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