GDP is the market value of final goods and services produced in an economy over a certain period. National Income Accounting was developed in the 1930’s to be a simple and understandable way to aggregate all monetary activity in an economy to measure the effects of the Great Depression. Economic welfare (well-being) however is not solely about how much money there is in an economy. Constanza (2009) in his article defined economic well-being as “the degree to which society’s goals (to sustainably provide basic human needs for food, shelter, freedom, opportunities, etc) are met”. In the long term as well as the short.

GDP encompasses all economic activity, from which we gain important values such as economic growth and GDP per capita. Nearly every country in the world collects this data and macroeconomists and Governments use this data in their analysis and decision making on policy. Growth is high up on the list of priorities for most economies as it usually indicates increasing GDP per capita as well as an expanding economy. This is beneficial in providing more goods to the economy for investment, increasing material standards of living and also to provide more jobs and wealth. The principle of National Income Accounting is that Production = Income = Expenditure, so the value for GDP also gives economists values for this data as well. All this makes the figure of GDP very useful to economists.

The data shows the UK since 1955 has increased its GDP (not adjusted for inflation) by a factor of 84 from £4’749m to £399’834m in the 2nd quarter of 2013. Although when put in real terms (taking into account inflation) with the production value being multiplied by the price level of the previous year (the Chained Volume Series), GDP has only increased by a factor of 4.5. This is still a good performance as the population has only increased by 23.9% in the same period,