The UK is losing more than £85 billion to fraud every year after financial crime increased by 20 per cent following the recession.
The latest “financial cost of fraud report” from accountancy firm BDO estimates that 5.5 per cent of the nation’s economic output is being lost to criminals, amounting to £85.3bn.
Global loss to fraud is estimated to be a staggering £2.91 trillion. The figures are an estimate of total losses, rather than just reported fraud.
Judith Scott, director of forensic accounting with BDO in Scotland, said: “Fraud is clearly a major issue in both the private and public sector.
“It is unfortunate that it can remain unnoticed during economic peaks and only become visible when close monitoring of finances becomes an imperative.”
The increase in losses reflects a common picture found in previous recessions – BDO says financial crime also spread following downturns of the early 1980s and 1990s.
But the firm said the financial crisis has provided the ideal conditions in which fraud can grow. The knock-on effects include poorer public services, less financially stable and profitable companies, reduced job security and lower disposable incomes among the general public.
But BDO says that if efforts to fight fraud were stepped up across all sectors, the UK could cut its losses by 40 per cent, or £34bn, within a year.
The measures would include the development of strong anti-fraud cultures, harsher deterrents, and the ironing out of systemic weaknesses which provide opportunity for fraud.