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WEDNESDAY 30th September 2015 GDP UNREVISED IN SECOND QUARTER OF 2015 Quarterly National Accounts Quarterly Gross Domestic Product In line with the National Accounts revisions policy, all quarters are open for revision. Quarter-on-same quarter of previous year growth Q1 2014 0.6% Revised from 0.9% Q1 2014 2.8% Revised from 2.7% Q2 2014 0.9% Unrevised Q2 2014 3.1% Revised from 3.0% Q3 2014 0.6% Revised from 0.7% Q3 2014 2.9% Revised from 3.0% Impact of Blue Book Changes on GDP Today’s Quarterly National Accounts publication is the first look at the Blue Book 2015 (BB15) dataset for the period Q1 (Jan to Mar) 1997 to Q2 (Apr to June) 2015. The annual Blue Book includes a range of important changes, including: 1. addressing Gross National Income (GNI) reservations on a European System of Accounts 1995 (ESA 95) basis; 2. incorporating the impact of reclassification decisions; and 3. implementing a range of other methodological improvements. % growth Quarter-on-quarter growth 2.0 1.5 1.0 0.5 Q4 2014 3.0% Revised from 3.4% Q4 2014 0.8% Unrevised -1.0 -1.5 -2.0 -2.5 Q2 2015 2.4% Revised from 2.6% Q2 2015 0.7% Unrevised growth indexed to Q1 2008 -0.5 Q1 2015 2.7% Revised from 2.9% Q1 2015 0.4% Unrevised 108.0 0.0 1997Q2 1999Q2 2001Q2 Revision 2003Q2 2005Q2 2007Q2 BB2014 Chained Volume Measure Estimates 2009Q2 2011Q2 2013Q2 2015Q2 BB2015 Chained Volume Measure Estimates Above: presents the quarter-on-quarter growth rates for CVM GDP Q2 1997 to Q2 2015. As with the annual growth of CVM GDP, the economic path is broadly unchanged and the differences are concentrated in those years where the largest annual revisions were seen - notably in 2003 and 2011 to 2013. chained volume measure, seasonally adjusted 106.0 104.0 102.0 Left: presents revisions to GDP and GDP per head since the previously published figures indexed from the pre-economic downturn peak (Q1, Jan to Mar, 2008) 100.0 98.0 GDP per head and downturn analysis 96.0 Quarter-on-quarter growth 94.0 92.0 90.0 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Real GDP previously published GDP per head previously published Real GDP current GDP Per Head current Peak to Trough Q1 2008 – Q2 2009 Now in relation to the predownturn peak Q2 2015 0.5% Unrevised Quarter-on-same quarter of the previous year growth Q1 2008 – Q2 2015 GDP GDP per Head Previous: Now: -6.0% -6.1% Previous: Now: -7.0% -6.9% Previous: Now: +5.2% +5.9% Previous: Now: +0.6% -0.1% Q2 2015 1.9% Unrevised GDP per head is calculated by dividing GDP in chained volume measures by the latest population estimates and projections. •The most recent economic downturn consisted of 5 consecutive quarters of negative growth. •Revisions to GDP show that GDP returned to pre-downturn levels one quarter earlier than previously estimated in Q2 (Apr to June) 2013. •GDP per head surpassed its predownturn peak in Q1 (Jan to Mar) 2015 and in Q2 2015 was 0.6% above that peak. Previous estimates showed that GDP per head was still below its pre-downturn peak. 1 WEDNESDAY 30th September 2015 GDP UNREVISED IN SECOND QUARTER OF 2015 Quarterly National Accounts Records and contributions to GDP Q2 2015 GDP Last higher Headline GDP per head 0.5 Income 0.7 CoE 1.2 Trade Balance Expenditure Of which Imports Q4 2014 Q1 2015 Q4 2014 Q1 2015 Q4 2014 Q1 2015 Q3 2012 Q1 2015 Q4 2014 Q1 2015 Q1 2015 Q1 2011 0.6 1.5 -7 236 Of which Exports Last lower 0.8 -7 644 1.9 3.8 -2.7 Revisions Q2 2015 0.6 Contr. to GDP 0.4 - 0.2 Income Strong CoE growth in Q2 2015 with positive contributions from wages and salaries as well as employer’s social contributions – strong growth in the latter attributed to higher funded data (pension scheme) returns. - 0.7 0.6 Expenditure Q2 2015 is the largest Q-on-Q trade balance narrowing since Q1 2011. Strong exports of goods (largely chemicals) and a fall in imports (decrease in machinery and transport equipment) were key drivers. 1.4 -14 041 Output Construction Q2 2015 quarter on quarter growth was revised from 0.2% to 1.4%. The revision was mainly due to the incorporation of late data regarding infrastructure for the four month period March to June 2015. 0.6 -1.2 Annual GDP and revisions contributions -0.9 -3.2 Trade balance shown in figures (£ million). Other values are shown as percentage growth. Table shows largest contributors to GDP Quarterly growth, Q1 2015 to Q2 2015, chained volume measures, seasonally adjusted CoE means Compensation of Employees 2010 1.5% revised from 1.9% 2011 2.0% revised from 1.6% 2012 1.2% revised from 0.7% 2013 2.2% revised from 1.7% 2014 2.9% Revised from 3.0% 1.0% 35.0 Contributions of the components of the expenditure measure of GDP to aggregate GDP revisions: BB15 compared with 2014 dataset, chained volume measure Contributions to final CP level change at BB15 (1997 to 2014) 30.0 25.0 0.5% 20.0 15.0 0.0% 10.0 5.0 -0.5% 0.0 -5.0 -1.0% -10.0 -15.0 -1.5% 1997 1999 2001 2003 2005 2007 2009 2011 GNI Network Rail Reclassification Smuggling Gross Fixed Capital Formation Local Government Pensions CPIH Alignment Transport for London Reclassification Alcohol and Tobacco Insurance Industry Government Alignment Latest available update to external data sources Total nominal GDP revision The contribution of the changes to final CP GDP level change are above. Much of the revision is accounted for by the GNI changes, particularly 2012, 2013 and 2014 - accounted for by the changes to the exhaustiveness provision. 2 2013 1998 2000 HHFCE 2002 NPISH 2004 GGFCE GCF 2006 Exports 2008 2010 Imports 2012 2014 Total revision The changes introduced in BB15 also have a relatively modest impact on the growth of the CVM GDP 1998 onwards, largely coinciding with the changes to growth of CP GDP. The chart above gives some sense of the drivers of these revisions to annual GDP growth. It highlights the importance of GCF to the revisions. In 2003, much of the change arises from processing changes to the acquisitions and disposals of valuables series, while in the later years it arises from several changes to investment data. This accounts for much of the additional growth in 2013, while stronger household consumption also plays a role. These effects are partially offset by a drag from trade (exports - imports) during 2013. HHFCE stands for household final consumption expenditure, GGFCE stands for general government final consumption expenditure, GCF stands for gross capital formation, NPISH stands for non-profit institutions serving households.