From the perspective of cattle and pigs, the UK will grow by 0.1% in 2023 and the GDP will hit a new high

Before officially introducing the UK's 2023 national economic report card, it is necessary to give some netizens a concept of popularizing science, that is, how much GDP growth and how much GDP expansion we usually mention are two different calculation dimensions.

In the UK, for example, Farmer A kept 10,000 and 500 pigs in captivity, compared to 10,000 in the previous year, and Farmer B kept 10,000 cattle in captivity in 2022 but only 9,800 in 2023.

Next is a very simple question for primary school students, Farmer A in the UK will raise 500 more pigs in captivity in 2023 than in 2022, with a growth rate of 5%; Farmer B kept 200 fewer cattle than the previous year, and the number of cattle raised decreased by 2%.

From the perspective of the number of captive animals, Farmer A increased by 5%, Farmer B decreased by 2%, and it seems that A has won. But it doesn't have to be the quantity, it can also be the selling price – which farmer has a higher percentage of income.

Assuming that in 2023, the price of pork in the UK increases by 5%, and when combined with the number of pigs raised by 5%, the income of Farmer A will increase by about 10%.

However, the price of beef in the UK will increase by as much as 15% in 2023, and even after excluding the 2% loss of farmed quantity, the actual income of Farmer B will still increase by about 13% - this growth rate is higher than that of Farmer A.

Please think about it: How to determine the victory or defeat between the two farmers in the above example?

Many people may find it difficult to judge. From the point of view of increasing the number of farms, the winner is Farmer A. However, from the perspective of income growth, although the number of cattle raised by Farmer B decreased by 2%, the income growth rate still exceeded that of A, driven by the soaring price of beef.

Economists also believe that this is difficult to decide, so they have led to two different calculation criteria, that is, when mentioning who has the higher level of growth, excluding the influence of price changes, only looking at quantity. That is, Farmer A increased by 5%, and Farmer B decreased by 2%.

But at the same time, the "total income calculated at market price" was announced, and the total income of the two years before and after gave everyone a new understanding of the victory and defeat between the two farmers A and B - not the quantity, but the income, that is, the price.

Once you understand it, let's reveal the UK's economic report card for 2023

Preliminary statistics show that due to the simultaneous downturn in the service industry, manufacturing industry, and construction industry, and the inability of corporate investment to effectively hedge the decline in household consumption, the British economy will only grow by 0.1% in 2023, almost falling into recession.

This slight growth of 0.1% is the change in the number of pigs and cattle raised by Nansheng mentioned above. This shows that the number of goods and services created by the British in 2023 has barely changed compared to the previous year - only 0.1% more.

At the same time, however, it is also necessary to publish the amount of GDP calculated at market prices – how much GDP grows or falls, from a quantitative point of view, but what exactly the amount of GDP reaches needs to be factored into price changes.

According to the market price of the current year, the GDP of the United Kingdom in 2023 will reach 2,689.974 billion pounds, compared with 2,505.981 billion pounds in the previous year. In terms of prices, the UK economy expanded by 7.3% in 2023.

To distinguish between these two different growth criteria, we call 0.1% growth "real growth, real growth, and the word real or real can be omitted" and read: UK GDP growth of 0.1% in 2023.

The 7.3 per cent growth rate obtained after taking into account the price factor is called "nominal growth, and the nominal word cannot be omitted". This is the correct report of the UK's national economy in 2023: GDP expanded to 2,689.974 billion pounds, a year-on-year increase of 0.1%.

Then look at the UK's economic report card for 2023

Under the influence of the slight appreciation of the pound exchange rate, the UK's GDP in US dollar terms reached 3,344.73 billion in 2023 - a breakthrough of 3.3 trillion US dollars and a record high. As we have seen, the core contributor to this record high is inflation, not real production.

The UK has a population of less than 68.5 million in 2023, a GDP per capita of nearly $49,000, a record high, and a 7.1% nominal increase in average earnings in 2023 after a 7.5% nominal increase in 2022, and an unemployment rate of 3.8% at the end of the year. This article is written by Nansheng, and reprinting and plagiarism are strictly prohibited!