The UK is expected to see a slow decline in its ‘shadow economy’—the production of and trade in legal goods and services that are deliberately concealed from public authorities - by 2025, according to a new study from ACCA.
Emerging from the shadows: the shadow economy to 2025estimates the underground economy in the UK represented 11.5% of GDP in 2016– which would have totalled approximately £223 billion[1]. This is expected to fall slightly in the coming years, to 10.8% by 2025 – but remains a sizeable portion of the UK economy.
The global average is expected to fall from 22.5% to 21.39% of GDP over the same period.
‘The prevalence of shadow economy activity throws up considerable practical and ethical issues for both business and government,’ says Helen Brand OBE, chief executive of ACCA.
‘The UK has a relatively small shadow economy compared with other countries around the world, but it is quite worrying that by 2025 it won’t have fallen by much. The current factors contributing to the UK’s shadow economy are high unemployment and low GDP.
ACCA’s head of business insights, Faye Chua, says:
‘The shadow economy presents an enormous challenge for society and a huge potential opportunity for the profession to play an active role across the entire value chain from measurement and monitoring through to helping shadow firms and individuals manage their financial affairs and possibly make the transition from informal to formal.
‘Effective management of the underground economy requires action at all levels – government, cities, local communities and individuals.’
Full press release
© ACCA - Association of Chartered Certified Accountants
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