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What’s next
Peter Patterson, Deputy Chief Economic Adviser
Graeme Walker, Head of National Accounts
ONS Economic Forum
10 July 2014
1
What’s next
• Johnson review of price statistics (autumn)
• Re-weighting of LFS estimates using 2011
Census data (October) – historic data in
September
• Blue Book 2014
2
Improvements to National Accounts in September
2014
Graeme Walker
Head of National Accounts
ONS Economic Forum: 10 July 2014
3
Outline
• What improvements are being made?
• Impact on GDP
• Current price levels
• Real GDP growths
• Other impacts
• Public Sector Finances
• Sector and Financial Accounts
• Balance of Payments
• International experience
4
Improvements
• New international frameworks
(ESA 2010, BPM6, MGDD)
• Improvements to methods
• New data (not relevant for period
up to 2009)
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New International Frameworks
• R&D
• Weapons
• Decommissioning costs
• Pensions
• BPM6 changes
• 10 June articles
6
Improvements to methods
• Review of Non-Profit Institution serving
Households units (NPISH)
• Financial Intermediaries Services Indirectly
Measured (FISIM)
• Illegal Activities
• New Cars
• Own-account construction
• Exhaustiveness adjustments
• Gross Fixed Capital Formation
• Inventories
• 29 May articles
7
Impact on GDP levels (97 to 09)
• Average revision +3.6% (£43 bn)
• ESA 2010 +2.0% (£24 bn)
• Methods improvement +1.6% (£19 bn)
• Biggest impacts (average)
• R&D +£17 bn
• NPISH review +£9 bn
• Illegal activities +£9 bn
• Weapons +£3 bn
• Pensions +£3 bn
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Revisions to GDP levels
Annual current price level of GDP by Blue Book Vintage (£ billions)
1,600
BB00
BB01
1,400
BB02
BB03
1,200
BB04
BB05
1,000
BB06
BB07
800
BB08
BB09
600
BB10
BB11
400
BB12
BB13
BB14
200
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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Revisions to GDP levels
Annual current price level of GDP by Blue Book Vintage (£ billions)
1,600
BB00
1,500
BB01
BB02
1,400
BB03
BB04
1,300
BB05
BB06
1,200
BB07
BB08
1,100
BB09
BB10
1,000
BB11
BB12
900
BB13
BB14
800
700
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
10
Real GDP annual growths
• Average growth 97-09 still +2.2%
• 97-07 still +3.2%
• 08-09 stronger than in BB13 but very similar to BB12
• Some changes to path
• 99, 01 and 09 are stronger
• 00, 04 and 07 are weaker
• Final analysis of downturn requires quarterly path
(to be published early September)
• Length of downturn looks to be the same
• Depth of downturn looks to be a bit shallower but similar
to BB12
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Revisions to Real GDP growths
Annual Chained Volume Measure growth of GDP by Blue Book Vintage - OFFICIAL SENSITIVE
6.0%
BB00
4.0%
BB01
BB02
BB03
BB04
2.0%
BB05
BB06
BB07
0.0%
BB08
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
BB09
BB10
-2.0%
BB11
BB12
BB13
BB14
-4.0%
-6.0%
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Annual Real GDP growth rates in
various Blue Books
percent
6
4
2
0
previous revisions
BB 2013
-2
BB 2014
-4
-6
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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Public Sector Finances
• PSND increased by around £30bn in recent years
• all due to the reclassification of network rail to central
government
• PSF only change at this stage due to timing of advice from
Eurostat
• PSNB generally increased by £2bn - £4bn in recent
years
• mainly due to network rail and change in treatment of Local
Authority pension schemes
• Pension scheme impact on GDP already described; network
rail is PSF only
• Change to treatment of receipts from 3G/4G mobile
phone licence auctions alter the PSNB profile
• increase of £22bn in 2000 offset over subsequent years
• PSF only change due to timing of advice from Eurostat
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Public Sector Finances
• Change to treatment of the Royal Mail Pension Plan
transfer also alters the profile of PSNB
• increase of £36bn in 2012 offset over subsequent years
• current/capital transfers with no impact on GDP
• Weapons/R&D capitalisation switches
• spending from current budget to net investment without
changing PSNB (GDP impact already described)
• Changes announced in December/February with
detailed article published in June
• PSF bulletin now includes detailed estimates of ESA10
impact on deficit and debt
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Comparison of PSND measures
1,600
£billion
1,400
Current PSND ex (ESA1995)
1,200
1,000
New PSND ex (ESA2010 and PSF
Review)
800
600
400
200
0
1. Figures based on data published in Public Sector Finances on 20 June 2014
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Comparison of PSNB measures
180
£billion
160
Current PSNB ex (ESA1995)
140
120
Current PSNB ex (excluding RMPP
& APF transfers) (ESA1995)
100
80
New PSNB ex banks (ESA2010 &
PSF Review)
60
40
20
0
-20
-40
-60
1. Figures based on data published in Public Sector Finances on 20 June 2014
2. RMPP = Royal Mail Pension Plan; APF = Asset Purchase Facility
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Sector and Financial Accounts
• 9 July article
• NPISH – uplifts both NPISH and household final
consumption expenditure (as HHs consume NPISH goods
and services)
• Changes to the reference rates, removal of interbank FISIM
and adjustments to FISIM imports will impact all sectors,
especially HH
• Illegal activities will increase HH expenditure, intermediate
consumption and mixed income
• Car list prices will reduce HH expenditure by less than £1
billion per year
• Exhaustiveness adjustments impact HH expenditure both
positively (fuel) and negatively (gambling and digital TV)
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Sector and Financial Accounts (part 2)
• Own account construction increases PNFC and
HH fixed capital formation
• R & D impact on gross fixed capital formation will
be seen across the sectors
• Weapons systems capitalisation impact will be
seen in the government sector
• Pensions – new service charge methods and
including funded defined benefit schemes for local
government and NPISH increases their
expenditure and output
• Detailed impact and changes which only impact
on 2010 and later to follow on 12 August
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Balance of Payments (BoP)
• Biggest change - measurement basis of direct
investment profits for monetary financial institutions
changes from an all inclusive (AI) to a current
operating performance basis (COP)
• Other changes include:
• Revised treatment of non monetary gold
• Introduction of remote gambling
• Revised treatment of goods sent abroad for processing
• Overall impact of BoP changes:
• Before financial crisis – improvement in current
account balance
• During the financial crisis – deterioration in current
account balance
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International experience
• Worldwide implementation of SNA 2008
completed for US, Canada and Australia
• Impacts described by ONS for UK GDP are
of the same magnitude and direction as
those seen across EU member states and
worldwide
• ONS has already provided more detailed
information than most countries
• Most impacts expressed in nominal terms
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International Comparisons (Part 2)
International Comparison of ESA 2010 and R & D impacts 1
R&D
Nominal GDP
UK (2009)
Canada (2010)
Australia (2008-09)
USA (2009)
Austria (2011)
Denmark (2008)
Finland (2011)
France (2010)
Germany (2011)
Luxembourg (2011)
Netherlands (2010)
Portugal (2011)
Slovenia (2011)
Spain (2010)
Sweden (2011)
0
1
1 Not all countries have declared R & D impacts at this stage
2
3
4
5
per cent
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Publication Schedule
• 9 July– Summary of impact on Sector and
Financial Accounts (SFA) and Balance of
Payments, International Comparisons,
Layout of Blue Book, Pink Book and UKEA
publications
• 23 July - Impact on GDP components of
ESA 2010 and non ESA 2010 changes for
1997 – 2009
• 12 August (prov) – Detailed impact on SFA
and Balance of Payments
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Publication Schedule (part 2)
• Mid/End August - 2010 – 2012 real and
nominal GDP annual changes
• Early September – Reminder of all impacts
plus quarterly path of real GDP 1997 2012
• 30 September – Publication of Quarterly
National Accounts and Balance of
Payments on ESA 2010/BPM6 basis
• 31 October – Publication of Blue Book and
Pink Book 2014
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