The global offshore system means we can’t trust basic economic figures

The Netherlands' role as a tax haven screws up UK economic data.

Donald Trump doesn’t know what he’s talking about when he decries America’s trade deficits with countries around the world—and that’s not his fault. None of us do.

Thanks to offshoring practices like those revealed in the Paradise and Panama Papers, global trade figures are “a big black hole,” says Daniel Haberly, an economic geographer at the University of Sussex. “We don’t really know what the world economy actually looks like. That’s the big burning question for me. We have this picture of what it looks like on paper but in reality it’s probably something completely different.”

Look no further than the UK for an example of how crazy trade statistics are. The first name on its list of top foreign direct investors doesn’t surprise—it’s the world’s biggest economy, the United States. Second place, however, isn’t such a behemoth. According to British government stats, the Netherlands supposedly shoveled £139.8 billion ($186 billion), 28% of its GDP, into the UK in 2015.

Anglo-Dutch ties run long and deep, but can a country of just 17 million people really be investing so much cash into Britain alone?

Quite simply, no. The Netherlands is not just a smallish European trading nation—it’s also one of the world’s biggest conduits for cash going to and from tax havens. When the British government broke down its FDI statistics this year (chapter 6), it realized that only 34.5% of that money actually came from the Netherlands; much of the rest being from European subsidiaries of big US companies or… from British companies rerouting their money.  (more...)

The global offshore system means we can’t trust basic economic figures

We're screwed.