Italy discovered it was no longer in a recession today thanks to a change in data calculations across the European Union which includes illegal economic activities such as prostitution and drugs in the GDP measure. 

Adding illegal revenue from prostitutes, drugs and black market cigarettes and alcohol to the euro zone's third-biggest economy boosted gross domestic product figures. 

Italy's GDP rose slightly from a 0.1% decline for the first quarter to a flat reading, the national institute of statistics said. 

Although ISTAT confirmed a 0.2% decline for the second quarter, the revision of the first quarter data meant Italy had escaped its third recession in the last six years. 

An economy must contract for two consecutive quarters, from output in the previous quarter, for a country to be technically in recession. 

The new system, known as SEC 2010, aims to facilitate comparison of data between countries, regardless of whether or not they have legalised prostitution and decriminalised drugs - activities already included by some in their GDP calculations. 

The revision brings a bit of extra breathing room for Prime Minister Matteo Renzi's government, which is struggling to boost the economy and implement reforms whilst keeping the deficit below the EU's 3% ceiling. 

Black, or undeclared, market revenues are also expected to help reduce Italy's debt to GDP ratio, which stands at a 132%, more than twice the EU ceiling of 60%. 

ISTAT said it expected Italy's GDP to fall 0.3% in 2014. The finance ministry has forecast a return to growth in 2015, with a rise in GDP of 0.6%.