What is GDP, how is it measured and why does it matter?

Published28 JuneGross domestic product (GDP) is an important tool for measuring how a country's economy is doing.It lets governments work out how much they can afford to tax and spend, and helps businesses decide whether to hire more people.What is GDP and how is it worked out?GDP is a measure of all the economic activity of companies, governments and people in a country.In the UK, new GDP figures are published by the Office of National Statistics (ONS) every month. However, quarterly figures - covering three months at a time - are considered more important.Most economists, politicians and businesses like to see GDP rising steadily.That's because it usually means people are spending more, extra jobs are created, more tax is paid and workers get better pay rises.When GDP is falling, it means the economy is shrinking - which can be bad news for businesses and workers. If GDP falls for two quarters in a row, that is known as a recession, which can lead to pay freezes and job losses. What...