Measuring the Economy 29 September 2023.

1. Measuring the economy
29 September 2023
1

2. Welcome
Mike Keoghan
Director General
Economic, Social and Environment Group
Office for National Statistics
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3. Agenda
09:30am – 09:35am Welcome and introduction – Mike Keoghan, Director General for
Economic, Social and Environment Group
09:35am – 09:45am Today’s latest GDP data and revisions – Niamh McAuley,
Head of Quarterly GDP
09:45am – 09:55am Today’s Trade and Balance of Payments data – Chloe Gibbs,
Deputy Director, Global Trade and Investment
09:55am – 10:05am ONS approach to measuring GDP – Craig McLaren,
Deputy Director, Head of National Accounts
10:05am – 10:25am Question and answer session
10:25am – 10:30am Closing remarks – Mike Keoghan, Director General for
Economic, Social and Environment Group
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4. Today’s latest GDP data
and revisions
Niamh McAuley
Head of Quarterly GDP
Office for National Statistics
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5. Summary of main changes for latest data
• There is little to no revision to previously published GDP from 2022 onwards,
and we’ve seen only 1 out of the last 6 quarters have been revised
• The quarterly growth rate of GDP across 2022 is unrevised. Growth in 2023 Q1
is revised up 0.2pp and 2023 Q2 is unrevised.
• Our new data includes the previously announced upwards shift to 2020 and
2021
• Wide range of quality improvements we’re bringing in as part of this release
• New methods introduced as part of Blue Book 2023; this include new measures of travel
services, better measurement of non-market gross value-added new deflators; new VAT data
for Q4 2022 and Q1 2023, updated trade in services data; previous GDP balancing
adjustments
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6. Average real GDP, %
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1 2023 Q2
GDP first quarterly estimate (August 2023) GDP quarterly national accounts (September 2023)
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7. 7
Services- contributions to growth 2023 Q2
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8. 8
Manufacturing - contributions to growth 2023 Q2
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9. Quarterly Household Pension to Non-Pension
Saving (%, CP)
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10. Today’s Trade and
Balance of Payments data
Chloe Gibbs
Deputy Director
Global Trade and Investment
Office for National Statistics
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11. 11
Latest balance of payments estimates
The underlying UK current account deficit
excluding precious metals was 4.2% of
GDP in Quarter 2, little changed over the
past year
The trade deficit reduced by £0.9 billion
in Quarter 2 2023
But primary income deficit widened under
increased interest rates; debits increased
more than credits as there are higher
non-residents’ investments in the UK than
UK residents’ investments abroad
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Methodology improvements have been applied
to estimates, 1997 onwards
In relation to trade:
• Following extensive methodology and validation
collaboration with HMRC, we have adjusted downwards
these imports in Jan – Jun 2022 to reflect Staged
Customs Controls (SCC).
• Methods improvements to education exports have
increased exports estimates by £4 billion in 2021.
• Wider range of quality improvements we’re bringing in
as part of this release:
• Globalisation
• Method of proportioning household expenditure on smuggled
tobacco
• Rail passenger data, Embassies and consulates, and US Air
Force data
• Deflators (Travel and those for services between affiliated
enterprises, other business publishing, and intangible assets)
Foreign Direct Investment:
• Population changes in 2020 were previously applied
to 2020 onwards
• Until now the 2020 data was provisional; benchmarked data now
incorporated
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13. 13
Measuring globalisation in national accounts
Improvements to measuring globalisation in UK national accounts has focused on a small
number of multi national enterprises, and based on:
• The way in which transactions are recorded when economic ownership changes
• This is following international guidance on the classification of businesses
• Of different business models considered,
UK principals in toll manufacturing
arrangements and merchanting have the
largest impact in trade estimates
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14. 14
Impacts of revisions 1997 to 2021: Current account
The revision to the Current account
ranges from -0.1% of GDP in 1998 to
+1.0% in 2021
Current account balance revisions as % of nominal GDP, 1997 to 2021
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15. 15
Staged Customs Controls adjustments (2022)
Applied to first half of 2022, to remove 2021 goods imports that were reported in 2021 under
Intrastat, and reported again in 2022 under customs declarations.
• Impact is a reduction of £6 billion in goods imports from the EU in Jan to June 2022
• Applied across the first six months of that year, with a small tailing off in May/June
• Main impact is on vehicles other than railway and tramway
• Details to be provided in our article to accompany UK Trade: August 2023, published 12
October
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16. ONS approach to
measuring GDP data
Craig McLaren
Head of National Accounts
Office for National Statistics
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17. The UK approach to measuring GDP
• Monthly GDP: flash estimate, but based on the output approach, is published
around 40 days after the end of the reference month.
• First Quarterly Estimate: published around six weeks after the end of the
reference quarter containing output, expenditure and income data.
• Quarterly National Accounts: published around 13 weeks after the end of the
reference quarter and includes a full national accounts dataset with increased
data content.
• Annual Bluebook (coherent annual estimates): published usually in July or
October each year. The Blue Book is an annual publication, and is the point of
annual reconciliation of data sources.
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18. What changes occur between our Quarterly
National Accounts and Annual National Accounts?
1. Use of updated data (e.g. new data from our annual surveys)
2. Improved methods and new data sources introduced
3. More complete data available on key concepts (e.g. intermediate
consumption from Annual Business Survey and Annual Purchases Survey)
4. Annual supply and use balancing in current prices and volume estimates at
the detailed 112 product and 112 industry level
5. This takes account of price impacts (deflation) by industry and product
rather than high level aggregates
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19. Why do we see revisions?
• UK economy is ~£2.5 trillion. GDP is compiled using many different sources
covering combinations of administrative and survey information
• We have a balance between timeliness and reliability. Data content improves over
time
• Use of comprehensive administrative data replaces early survey data
• Annual surveys have far greater detail but can come with a time lag (e.g. 2 years)
• Our National Accounts revision policy helps us manage our changes
• We monitor revision performance and this shows that typically (on average) our
initial revisions to GDP estimates at the t+3 month horizon are not statistically
significant. Will be impacted by underlying changes in the economy.
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20. International context
• The challenge of measuring the 2020 and 2021 time periods is not unique to
the UK
• Some recent revisions for 2021 are in line with our announced changes
• UK: 1.1 percentage points up (8.7 percent from 7.6 percent)
• Spain: 1.1 percentage points up (6.4 percent from 5.5 percent) Spanish Statistical Agency
• Netherlands: 1.3 percentage points up (6.2 percent from 4.9 percent) The Netherlands
• Italy: 1.3 percentage points up (8.3 percent from 7.0 percent) Italy
• Countries will have their own revision schedules
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21. Office for Statistics Regulation review
Review currently underway, focused on three themes:
1. Processes and quality assurance involved in making revisions to GDP
2. Potential improvements to early estimates of GDP enabled through enhanced
access to data
3. Communication of:
• revisions to GDP
• the story behind the most recent set of revisions in particular
• uncertainty in early estimates of GDP
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22. Q and A
Grant Fitzner
Director and Chief Economist
Economic, Social and Environment Group
Office for National Statistics
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23. Thank you for attending
Measuring the economy
You can keep up to date on all upcoming events via
ons.gov.uk/economicevents
If you would like to ask a question or provide any feedback, please do so
via economic.engagement@ons.gov.uk
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