Sunday

3rd Mar 2024

Sex and drugs drive EU growth surge

  • The EU economy will post a 2.5 percent growth rate, largely thanks to a new accounting system. (Photo: Jorge Franganillo)

Ask a politician in any EU country what they would give for an extra 2 percent on their nation's economic output without any policy changes, and you are likely to be offered a couple of limbs and a body part.

Yet Eurostat is set to publish figures on Friday (17 October) showing that the bloc's GDP has grown by nearly 2.5 percent.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

However, the apparent surge in economic growth is not the result of increased spending or output and will not make anyone feel richer. Instead it is the product of a new accounting system used by the EU's statistical agency to calculate economic activity which includes sectors ranging from research and development to drug trafficking and prostitution.

October is the first month that EU countries have to report data based on the revised regulation on the European System of National and Regional Accounts, known as ESA 2010.

The main innovation in ESA 2010 is that investments in research and development are classified as assets that will create value in future years, a move which, on its own, is worth an extra 1.9 percent.

"In a modern, more and more digital economy, R&D is an investment for the future even more important than buildings, trucks, or factories," said Eurostat in a briefing paper explaining the new regime.

The new methodology also classifies military spending as an investment in the future, and includes chunks of the grey economy and illegal activities such as drug trafficking, prostitution, and smuggling to be taken into account in the gross domestic product.

The UK's Office of National Statistics estimates that Britons' spending on prostitution and illegal drugs bolsters the UK economy by as much as £11 billion (€13.8 billion).

But the EU institutions cannot be accused of cooking the books since ESA 2010 is based on the most up-to-date accounting system used by the United Nations, which is in the process of being implemented across the world.

The US has been using the new rules since August 2013, with Eurostat estimating that this has inflated the US economic indicators by 3 percent.

The legislation putting the rules in place attracted almost no attention when it was adopted by MEPs and ministers in 2012 but will give the bloc its fastest economic growth rate since 2007.

The eurozone registered zero growth in the first six months of 2014 and has expanded by a mere 1.3 percent since 2010.

Finland and Sweden are expected to see the biggest change from the new system of reporting.

Finland's statistical office says that its GDP will go up by 4.3 percent, while Statistics Sweden expects that its figures will be "adjusted upwards by slightly more than 5 percent of which about 4 percentage points are an adaptation to ESA 2010."

Austria, the Netherlands and the UK are forecast to enjoy a 'growth' rate of between 3 and 4 percent, while Latvia, Lithuania, Hungary, Romania and Poland will benefit by less than 1 percent.

Valencia faces EU probe over dodgy statistics

The EU commission has launched a probe into whether the Spanish region of Valencia is guilty of the first case of statistical fraud since the Greek crisis in 2009.

MDMA drug resurges in Europe

Over 2 million people, many of them young adults, have taken the synthetic drug in the last 12 months.

New accounting rules save EU deficit

Budget deficits in the EU were within the limits set out in the bloc's stability pact in 2013 thanks to changes to accounting rules.

Opinion

A fundamental contradiction in EU drug policy

The knock-on affects from a 'war on drugs' in Europe is creating problems in Albania - and as far afield as Guinea-Bissau, Mali, Bangladesh and the Philippines.

New police station promised for Brussels-Midi amid drug problem

Belgian prime minister Alexander De Croo announced a set of 22 measures in response to concerns about crack abuse and insecurity around the Brussels Midi station — a key interchange for local, national, and international destinations from the capital city.

'Outdated' rules bar MEP from entering plenary with child

During a plenary session in Strasbourg, an MEP was denied access to the chamber because he was carrying his young child, due to unforeseen circumstances. The episode shows parliament's rules need to be updated, several MEPs told EUobserver.

Opinion

Why are the banking lobby afraid of a digital euro?

Europeans deserve a digital euro that transcends the narrow interests of the banking lobby and embodies the promise of a fairer and more competitive monetary and financial landscape.

Latest News

  1. EU docks €32m in funding to UN Gaza agency pending audit
  2. 'Outdated' rules bar MEP from entering plenary with child
  3. Commission plays down row over Rwanda minerals pact
  4. EU socialists set to anoint placeholder candidate
  5. Why are the banking lobby afraid of a digital euro?
  6. Deepfake dystopia — Russia's disinformation in Spain and Italy
  7. Putin's nuclear riposte to Macron fails to impress EU diplomats
  8. EU won't yet commit funding UN agency in Gaza amid hunger

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us