GDP can also help governments work out if they are borrowing too much. For the 2020-21 financial year, the government borrowed nearly £300bn to pay for the costs of the coronavirus pandemic.
Comparing that figure to GDP tells you the government is borrowing about 14% of GDP in one year.
That's the biggest borrowing figure since World War Two.
How is it measured? pg slot
GDP can be measured in three ways:
Output: The total value of the goods and services produced by all sectors of the economy - agriculture, manufacturing, energy, construction, the service sector and government
Expenditure: The value of goods and services bought by households and by government, investment in machinery and buildings - this also includes the value of exports, minus imports
Income: The value of the income generated, mostly in terms of profits and wages.
In the UK, the Office for National Statistics (ONS) publishes one single measure of GDP, which is calculated using all three measurements. But early estimates mainly use the output measure.
The ONS collects data from thousands of UK companies to use in its calculations.