The GDP Lie That's Destroying Our Economy - Richard Murphy

4th February 2026

GDP dominates political debate, but it tells us almost nothing about real prosperity, well-being, or hope.

Created as a technical statistic of massive use in wartime, GDP was never meant to measure success and yet it now drives policy, justifies inequality, and is used as an excuse for austerity.

In this video, I explain why GDP is conceptually flawed, how it rewards harm and ignores distribution, and why we urgently need economic measures that value hope, prevention, and human flourishing instead of economic churn of no value at all.

A Separate Explanation

What is GDP and is it a good measure of the UK economy?

Gross Domestic Product (GDP) is the most commonly used measure of the size of an economy. It represents the total value of all goods and services produced within a country's borders over a given period of time, usually measured quarterly or annually. In the UK, GDP is calculated by the Office for National Statistics (ONS) and is used by the government, economists, and international organisations to assess economic performance.

GDP can be measured in three main ways:

Output method - the value of goods and services produced

Income method - wages, profits, and taxes generated

Expenditure method - total spending by households, firms, government, and foreign buyers

In practice, all three should give the same figure.

Why GDP is a good measure of the UK economy

GDP is useful because it provides a clear, standardised indicator of economic activity. It allows policymakers to track whether the UK economy is growing or shrinking, helping identify recessions and recoveries. For example, falling GDP over two consecutive quarters is commonly used to define a recession.

GDP is also valuable for international comparison. Because it is calculated in similar ways across countries, it allows economists to compare the UK's economic performance with other economies such as the US, Germany, or France.

In addition, GDP growth is closely linked to employment, tax revenues, and public spending capacity. When GDP rises, businesses tend to produce more, employment often increases, and the government collects more tax, which can be used to fund public services.

Limitations of GDP as a measure of the UK economy

Despite its usefulness, GDP has significant weaknesses and does not fully reflect economic wellbeing.

First, GDP does not measure living standards. GDP may rise while real wages stagnate or inequality increases. In the UK, economic growth has not always translated into higher incomes for all households, particularly during periods of rising inflation or housing costs.

Second, GDP ignores income distribution. A growing economy may benefit higher earners or certain regions (such as London and the South East) more than others, masking regional inequalities that are emphasised in the UK economy.

Third, GDP does not account for unpaid work such as caring, volunteering, or household labour, which are economically valuable but not bought or sold in markets.

Fourth, GDP fails to consider environmental costs. Economic growth may increase pollution, carbon emissions, or resource depletion. In the UK, activities that damage the environment can raise GDP in the short term even if they reduce long-term sustainability.

Finally, GDP does not capture quality of life factors such as health, education quality, job security, or wellbeing, which are increasingly important in modern economic assessments.

GDP is a useful but incomplete measure of the UK economy. It is effective for tracking economic growth, identifying recessions, and making international comparisons. However, it is a poor measure of overall wellbeing and living standards because it ignores inequality, environmental damage, unpaid work, and quality of life.

Therefore, while GDP should remain an important indicator, it is best used alongside other measures—such as real wages, inequality data, employment quality, and environmental indicators—to give a more accurate picture of how the UK economy is really performing.