GDP is an important tool for measuring the size of the UK economy and allows us to keep track of how the economy is performing. The higher the value of GDP, the bigger the economy.
When GDP goes up, the economy is doing well. This can often be linked to higher salaries, more spending and investment, and high rates of employment.
When GDP goes down, the economy is not doing so well. This could be linked to a decline in earnings, reduced spending, and a lower standard of living.
We can also use GDP to compare our economy against other countries.
How do we calculate GDP?
GDP tells us how much we produce, spend, and earn in the UK economy over a certain time period. It also shows how these figures change over time. We produce estimates of GDP for each month, each quarter, and for the year as a whole.
We measure GDP using:
- the value of goods and services
- the UK’s spending, which includes household spending and how much government, businesses, and charities spend
- the UK’s income, which includes our wages, business profits, and taxes
We use many data sources to measure the economy, and the availability of data increases over time.
We estimate GDP by looking at data from surveys, as well as data provided by other government departments. These data can be from a range of sources, both in and outside of government, including:
- HM Treasury
- the Department for Energy Security and Net Zero
- the Bank of England
- the Department for Work and Pensions
GDP estimates also include data from business surveys, which cover topics such as expenditure, taxes, income, profits of corporations, and construction surveys.
When new or better sources of data become available, we will sometimes revise the level and growth of GDP. This means we can provide the most up-to-date estimates at any given time.