Growth at all costs? Why GDP doesn’t tell the whole story

              

 

The economy may have grown by 0.7% over the past three months, but a surprise contraction in April raises a bigger question: are politicians too obsessed with GDP? Growth makes headlines and helps governments balance the books, but it doesn’t measure thriving high streets, resilient communities, business confidence or quality of life. For many small business owners, success isn’t about abstract economic statistics. It’s about cashflow, customers, affordable energy, skilled staff and being able to plan for the future. Perhaps the real challenge isn’t growing the economy at any cost, but building an economy that works for everyone.

ARE POLITICIANS RIGHT TO BE OBSESSED WITH “GROWTH”.

The headlines this morning major on Growth and goals (and the resignation of the Secretary of State for Defence!).

Politicians talk about growth the way football pundits talk about goals, as if it’s the only thing that matters. GDP up? Success. GDP down? Crisis. GDP flat? Panic.

The latest growth figures are out this morning for the Feb/March/April quarter. They show strong growth in February and March, but the economy lost momentum in April and growth contracted.

The Office for National Statistics figures show the economy grew by 0.7% in the three-month period and contracted by 0.1% in April which is the first monthly fall since August last year. That’s hardly a surprise given the Middle East conflict, which started at the end of February, led to increased spending in March as people tried to protect themselves from future higher energy and fuel costs. That March growth was higher than expected and was forecast to have a knock-on impact on growth in April if the conflict lasted, which it has.

The question now is whether the next growth figures will show a further fall or indicate that the economy is holding up better than expected.

But is growth the right measure to be obsessed with? Is it measuring the things that make a society successful, and that small businesses, communities and high street businesses want to see? Here’s the debate.

POLITICIANS LOVE GROWTH

Growth makes government finances work

More growth means more tax revenue and money for public services allowing lower borrowing. Politicians like growth because it makes their budgets add up.

Growth keeps voters happier

When the economy grows wages rise and jobs are created because businesses invest. People feel more secure. Politicians know that when people feel poorer, governments get kicked out.

Growth is easy to measure

GDP is a relatively simple number to measure and it gives politicians a scoreboard. But there are arguments as to whether the

Growth is a global status symbol

Countries compare themselves. “Fastest‑growing economy in the G7” sounds good in a speech.

IS GROWTH THE RIGHT OBSESSION?

GDP measures activity, not quality. It counts:

• Pollution
• Crime
• Illness
• Repairs after disasters
• Debt‑fuelled spending

It does not measure:

• Wellbeing
• Health
• Community strength
• Environmental stability
• Fairness
• Opportunity
• Local resilience

A country can have rising GDP and falling life satisfaction. The UK has seen exactly that.

GROWTH DOESN’T ALWAYS TRICKLE DOWN

Politicians assume: “Grow the economy and everyone benefits.”

But small and micro businesses know that:

• Big firms capture most of the gains
• Local high streets don’t automatically revive
• Inequality widens
• Productivity gains don’t always reach workers
• Growth can be concentrated in a few places and sectors

GDP can rise, while communities decline.

WHAT ARE ALTERNATIVES?

The measures many economists, councils, and business groups say matter more:

WELLBEING ECONOMICS

These are used in New Zealand, Wales and parts of Scotland.

Measures include:

• Health
• Education
• Mental wellbeing
• Community strength
• Environmental quality

A successful society is one where people thrive, not just spend.

LOCAL ECONOMIC RESILIENCE

For small and micro businesses, this is the big one.

Measures:

• Number of local firms
• Survival rates
• Local supply chains
• High street vitality
• Access to finance
• Late payment levels

A town with strong local businesses is more resilient than one with a single giant employer.

INCLUSIVE GROWTH

Growth that reaches:

• Small businesses
• Low‑income households
• Left‑behind regions
• Disabled founders
• Minority entrepreneurs

This is the opposite of trickle‑down economics. Big businesses don’t have to spend and small ones do.

SUSTAINABLE GROWTH

Growth that doesn’t destroy the environment or saddle future generations with costs.

Measures include:

• Carbon emissions
• Energy efficiency
• Green jobs
• Clean transport
• Circular economy activity

PRODUCTIVITY PER WORKER, NOT GDP PER COUNTRY

This focuses on:

• Skills
• Technology adoption
• Management quality
• Innovation diffusion

This is where the UK is weakest, and where small firms need the most support.

DON’T DITCH GDP

Don’t ditch GDP but stop treating it as the only scoreboard.

A successful society needs:

• Growth
• Fairness
• Resilience
• Wellbeing
• Strong local economies
• Thriving small businesses
• Healthy communities

GDP is one ingredient, not the whole recipe.

HEED SMALL BUSINESSES

Small and micro businesses don’t care about GDP. They care about:

• Cashflow
• Late payments
• Business rates
• Planning delays
• Skills shortages
• Local footfall
• Fair competition
• Affordable energy
• Simple tax rules
• Reducing the admin burden

If politicians obsessed about those, the economy would grow anyway.

THE BOTTOM LINE

Politicians chase growth because it’s easy to measure and politically useful when it’s positive and going up, but a successful society needs more than GDP.

If the UK focused on:

• Local business resilience
• Fairness
• Wellbeing
• Strong communities
• Inclusive opportunity

…we’d get the growth and the society people actually want.

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