How black economy unbalances the books

The situation distorts official data and makes it harder for the Government to manage the economy, MPs were told.

The problem is almost certain to be made worse by the construction boom that will precede the 2012 Olympics in London, the Commons Home Affairs Select Committee was warned.

The level of 'irregular' immigration showed that the policy of admitting workers in sectors where there were shortages was failing to meet the needs of the economy, said Professor Nigel Harris, chairman of the migration committee of the Royal Society for the encouragement of Arts, Manufactures and Commerce.

Demand for unskilled or lowskilled labour showed no sign of decreasing, but sectors such as agriculture, catering and construction could not pay the kind of wages needed to get jobless Britons back to work.

The professor, from University College, London, warned: "A larger and larger part of the British economy is slipping below the statistical threshold." He said official economic figures were becoming 'pear-shaped' and added: "If you don't have proper figures it is impossible to manage the economy properly. The Government has to find a way to manage the black economy."

Matthew Hickley, 'The Daily Mail', 11 January 2006