Feeds

Osborne+ and Schmidt+ say 'the internet' = 8.3 per cent of UK GDP

Chancellor can't tell advertising from technology

Internet Security Threat Report 2014

The UK's part-time Chancellor of the Exchequer George Osborne+ has again drawn attention to the Conservative leadership's cosy ties with the predatory American advertising giant Google. Yesterday, the Financial Times ran an op-ed piece jointly-bylined to Osborne+ and Google chairman Eric Schmidt+.

It's highly unusual for a democratically-elected politician to align himself so closely to a single company. Particularly one that lobbies so hard against successful British economic sectors of media, culture and advertising. Google employs fewer people in the UK than the QVC Shopping Channel and pays a much-reduced tax by billing UK transactions through Ireland and Bermuda. Which is entirely legal - but hardly an ingratiating gesture to the indebted UK state. National debt will reach £1.359 trillion by 2015, with annual interest payments alone reaching £70 billion - so every little bit of tax revenue helps.

Schmidt+ and Osborne+ used the article to highlight the success of "Tech City" (formerly Silicon Roundabout) - which they called "the fastest-growing technology cluster in the world" - and promoted Google's contribution to the project, a building. These days Google is as much a property speculator as it is any thing else - spending almost $2bn on one prime piece of Eighth Avenue New York real estate.

But the Google kingpin and the British chancellor also included a dubious statistic.

"The 'internet economy' contributed £121bn to the overall UK economy in 2010, equivalent to 8.3 per cent of gross domestic product, according to research by Boston Consulting Group," they write.

An internet economy of this size is a mirage. It doesn't exist. The BCG report Osborne+ and Schmidt+ cite was published in 2012*, and the figure it arrived at was actually 7.2 per cent. It did so by counting every transaction on the internet as a contribution to GDP from internet companies.

The FT's own Economics Editor points out today that this is rubbish.

"Osborne doesn't understand GDP," Tweeted the FT's Chris Giles. "Absurd to say internet is 8.3% of GDP. So money is more 100% of GDP, right?" He continued:

"When I buy bread online, internet only a tiny fraction of the value added. Sloppy George. Sloppy"

The sum makes a nonsense of the Treasury's own GDP calculations. But Giles says that officials have refused to correct it.

"Flagged the dodgy stat with govt yesterday. officials wanted it kept in. That is one reason I am so cross today," he wrote. "it suggests the official attitude is that a big but bad number is worth more than accuracy".

Last week we revealed that the IP review ordered by Prime Minister+ David Cameron+ was based on a fictional quote, attributed to Google, that nobody could find. Now we have fictional GDP calculations, made up for the Government by Google.

At least it's becoming clearer who's really in charge. ®

Bootnote

For more on the Google-Conservative ties, see here and here.

Updated to add

* The report, published in 2012, was independently produced as opposed to the Google-sponsored 2010 document that the article originally and incorrectly referred to.

Beginner's guide to SSL certificates

More from The Register

next story
Docker's app containers are coming to Windows Server, says Microsoft
MS chases app deployment speeds already enjoyed by Linux devs
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
'Urika': Cray unveils new 1,500-core big data crunching monster
6TB of DRAM, 38TB of SSD flash and 120TB of disk storage
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
SDI wars: WTF is software defined infrastructure?
This time we play for ALL the marbles
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
Oracle hires former SAP exec for cloudy push
'We know Larry said cloud was gibberish, and insane, and idiotic, but...'
Symantec backs out of Backup Exec: Plans to can appliance in Jan
Will still provide support to existing customers
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.