The real powerhouse of the UK economy
Which of the following sectors would you say has made the biggest contribution towards UK economic growth over the past two years: manufacturing, banking or domestic workers, such as cleaners and nannies?
The answer is domestic workers. That’s right: “Activities of households as employers of domestic personnel”, which means everyone from housekeepers to butlers, accounted for 2.1% of the extra UK national income generated over the past two years. The manufacturing sector, by contrast, accounted for just 0.2% of the extra growth, and the banking and finance industry generated only 0.3% of that growth.
Now, sub-sectoral estimates of UK economic growth are volatile, but this does underline something important about Britain’s economy. While we have presumptions about the most important constituent parts, the truth is much of the recent increase in gross domestic product has come from other places.
Consider the car industry. Much is made of the fact that Britain is making more cars than ever before. And indeed, over the past couple of years car manufacture accounted for 1.6% of total GDP growth. But far more important than that was car retail, which accounted for 7.8% of the extra growth.
All these figures, by the way, can be found by fiddling with this spreadsheet from the Office for National Statistics.
PS I spent the day asking members of the public the question at the top. Most people got it wrong (which is fair enough, so would I). I also asked the Chancellor. He got it right.