blue book 2015 gross domestic product 1997 to 2013 matt hughes 1
TRANSCRIPT
Blue Book 2015Gross Domestic Product 1997 to 2013
Matt Hughes
1
What am I going to cover?
• GNI – methods recap
• Nominal GDP changes:
methods recap
final impact 1997 to 2013
• Real GDP changes:
methods recap
final impact 1997 to 2013
• Economic downturn analysis2
Current Price Changes - GNI
3
Gross National Income
Changes
Exhaustiveness: improved estimates for:
concealed income/activity
under-coverage of unincorporated small businesses (2009 onwards as required)
• Non-Profit Institutions Serving Households: builds on 2014 improvements:
NPISH unchanged but impact on other sectors and GDP reduced
improvements to the weights given to the new data 4
Gross National Income
Changes
• Cross Border Property Income:
MFI FDI income measured on current operating performance basis (COP) rather than all-inclusive (AI) basis: removes holding gains and losses – especially large impact in 2008/09 with the removal of large losses
reinvested earnings of mutual funds second homes: UK abroad and foreign residents in the
UK no impact on GDP first two already in UK published figures
5
Gross National Income
Changes
• Repairs & Maintenance on dwellings by households:
small double counting with minor repairs in household intermediate consumption and GFCF removed – very small impact
DIY spending on major repairs
• Vehicle Registration Tax:
treated as tax of a product rather than a fee for a sale of a service
6
Changes to GNI on ESA 1995 basis
• The Official correspondence - Questionnaire and Quality Report (QQR) will be submitted to Eurostat on 22 September 2015
• 1997 to 2001 are now closed years for the UK for GNI purposes (UK has no ESA 95 reservations)
• 2002 to 2009 can only be amended for reservations (detail has been provided in articles)
• 2010 to 2013 are open years for GNI revisions, which includes new methodology and new source data as well as a requirement to continue the ESA 95 reservation changes into the open period
7
Changes to GNI on ESA 1995 basis cont’d
• The total revision to GNI, 2002 to 2013 is therefore £2,352 million in the 2015 QQR.
8
2002-2009
2010-2013 Total
Difference between QQR 2014 and QQR 2015 for ESA95 GNI -27317 29669 2352
Current Price Changes – Non GNI
9
Other Current Prices Changes
In addition to some of the GNI changes, other CP changes include
• Gross Fixed Capital Formation: Improvements:
Removed double counting of land transfer costs in investment of new and major repairs to buildings
Replace modelled estimates for stamp duty with real data
• Reclassifications: keeping NA in line with the latest reclassifications:
Transport for London moves from Public Non-Financial Corporation to Local Government body – also made improvements to data coverage and data quality
Network Rail reclassified from Private non-financial corporation to Central Government
• Local Government Pensions: Builds upon 2014 improvements:
Improves the estimates of local government Compensation of Employees10
Other Current Prices Changes (Cont.)
• Alcohol and tobacco in Household Expenditure: Improvements:
Improved coherence with Her Majesty’s Revenue and Customs data by removing historic adjustments
• Narcotics in Household Expenditure: Correction:
Conversion of the UN Street Prices for narcotics into a sterling value before using to re-inflate volume data – this is a further new GNI revision
• Smuggling: Improvement:
Updated data on prices of smuggled alcohol and tobacco, 2008 onwards
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Other Current Prices Changes (cont.)
• Consumer Price Index including Housing (CPIH): Alignment:
In order to maintain alignment of household expenditure on actual and imputed rentals with the revised CPIH series for imputed rentals, CP estimates for imputed rentals in 2010 have been revised
• Insurance industry measurement: Correction:
Correction of an error in the processing of input data from regulatory insurance data returns, impacts from 2009 onwards
12
Changes to CP GDP, Annual Levels, ESA 2010 basis: final impact 1997 to 2013
• Between 1997 and 2013, CP GDP level revised by a range per year of -£2.8bn to +£21.8bn
• In aggregate, these changes raised the level of CP GDP by £4.2bn per year on average, or 0.3%
• Average increase to GDP estimate of £2.6bn between 1997 and 2011 – slightly larger in recent periods £9.8bn (2012), £21.8bn (2013)
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Contributions to changes to CP GDP annual levels, ESA 2010 basis: final impact 1997 to 2013
• Between 1997 and 2013, CP GDP level revised by a range per year of -£2.8bn to +£21.8bn
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£ Bn
Changes to CP GDP Annual Growth, ESA 2010 basis: final impact 1997 to 2013
• Between 1998 and 2013, CP GDP annual growth revised by a range per year of -0.4pp to +0.7pp
15
GDP Current Price History
BB01 BB02 BB03 BB04 BB05 BB06 BB07 BB08 BB09 BB10 BB11 BB12 BB13 BB14 BB15 REV1998 6.0% 6.0% 6.0% 6.0% 6.2% 6.1% 6.1% 5.9% 5.9% 5.9% 5.9% 5.6% 5.5% 5.1% 5.0% -0.1%1999 4.8% 5.0% 5.2% 5.2% 5.2% 5.3% 5.3% 5.6% 5.6% 5.6% 5.7% 5.3% 5.2% 4.3% 4.3% 0.0%2000 4.7% 5.3% 5.2% 5.2% 5.3% 5.1% 5.2% 5.1% 5.1% 5.1% 5.1% 4.9% 5.2% 6.3% 6.2% -0.1%2001 4.0% 4.5% 4.6% 4.5% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.6% 4.5% 3.8% 3.8% 0.0%2002 5.0% 5.0% 5.2% 5.2% 5.2% 5.3% 5.3% 5.3% 5.3% 4.8% 4.8% 5.2% 5.1% -0.1%2003 5.3% 5.5% 5.9% 5.9% 6.0% 6.0% 6.0% 6.0% 6.4% 6.2% 6.6% 6.2% -0.4%2004 5.3% 6.0% 5.9% 5.3% 5.5% 5.5% 5.5% 5.6% 5.6% 5.4% 5.5% 0.1%2005 4.1% 4.2% 4.3% 4.2% 4.2% 4.3% 5.2% 5.3% 5.7% 6.0% 0.3%2006 5.3% 5.5% 5.7% 5.9% 5.9% 5.6% 5.7% 5.8% 5.7% -0.1%2007 6.0% 5.5% 5.8% 5.8% 5.9% 5.8% 5.5% 5.5% 0.0%2008 3.4% 2.9% 2.0% 2.0% 2.4% 2.5% 2.4% -0.1%2009 -3.7% -2.8% -2.7% -3.1% -2.4% -2.2% 0.2%2010 4.6% 4.6% 4.8% 5.1% 4.7% -0.4%2011 3.4% 3.5% 3.8% 4.1% 0.3%2012 1.6% 2.3% 2.8% 0.5%2013 3.5% 4.2% 0.7%
Current Price annual growth by vintage
Real GDP changes
17
Real GDP Changes
• Changes introduced in Blue Book 2015 have a relatively modest impact on the growth of CVM GDP over the 1998 to 2013 period, largely coinciding with the changes to growth in GDP in current prices
• Average growth of real GDP remains unchanged at 2.0% per annum over 1998 to 2013
• Revisions to later years are larger – impact of both new data and methods changes. Real GDP growth in 2011, 2012 and 2013 are all revised upwards
18
Changes to CVM GDP Annual Growth, ESA 2010 basis: final impact 1997 to 2013
• Between 1998 and 2013, CVM GDP annual growth revised by a range per year of -1.0pp to +0.5pp
• Notably lower growth in 2003 and 2010 and slightly stronger in 2011, 2012 and 2013
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GDP CVM History
BB01 BB02 BB03 BB04 BB05 BB06 BB07 BB08 BB09 BB10 BB11 BB12 BB13 BB14 BB15 Rev1998 3.0% 2.9% 3.1% 3.1% 3.2% 3.3% 3.4% 3.6% 3.6% 3.6% 3.8% 3.5% 3.6% 3.5% 3.4% -0.1%1999 2.1% 2.4% 2.8% 2.9% 3.0% 3.0% 3.0% 3.5% 3.5% 3.5% 3.7% 3.2% 2.9% 3.2% 3.1% -0.1%2000 2.9% 3.1% 3.8% 3.9% 4.0% 3.8% 3.8% 3.9% 3.9% 3.9% 4.5% 4.2% 4.4% 3.8% 3.8% 0.0%2001 1.9% 2.1% 2.3% 2.2% 2.4% 2.4% 2.5% 2.5% 2.5% 3.2% 2.9% 2.2% 2.7% 2.8% 0.1%2002 1.7% 1.8% 2.0% 2.1% 2.1% 2.1% 2.1% 2.1% 2.7% 2.4% 2.3% 2.5% 2.5% 0.0%2003 2.2% 2.5% 2.7% 2.8% 2.8% 2.8% 2.8% 3.5% 3.8% 3.9% 4.3% 3.3% -1.0% (-0.4% CP)
2004 3.2% 3.3% 3.3% 2.8% 3.0% 3.0% 3.0% 2.9% 3.2% 2.5% 2.5% 0.0%2005 1.9% 1.8% 2.1% 2.2% 2.2% 2.1% 2.8% 3.2% 2.8% 3.0% 0.2%2006 2.8% 2.8% 2.9% 2.8% 2.6% 2.6% 2.8% 3.0% 2.7% -0.3%2007 3.0% 2.6% 2.7% 3.5% 3.6% 3.4% 2.6% 2.6% 0.0%2008 0.7% -0.1% -1.1% -1.0% -0.8% -0.3% -0.5% -0.2%2009 -4.9% -4.4% -4.0% -5.2% -4.3% -4.2% 0.1%2010 1.8% 1.8% 1.7% 1.9% 1.5% -0.4% (-0.4% CP)
2011 0.8% 1.1% 1.6% 2.0% 0.4% (0.3% CP)
2012 0.2% 0.7% 1.2% 0.5% (0.5% CP)
2013 1.7% 2.2% 0.5% (0.7% CP)
CVM annual growth by vintage
Changes to CVM GDP Quarterly Growth, ESA 2010 basis: final impact 1997 to 2013
• Relatively small scale revisions. Average quarterly growth rate of UK economy is unchanged at 0.5% per quarter between Q2 1997 and Q4 2013.
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GDP changesrevisions to the expenditure components of real GDPrevisions to the income components of nominal GDP
22
Real GDP Changes – expenditure component key findings
Component ImpactHousehold Final Consumption Expenditure (HHFCE)
Relatively minor impact. Small changes driven by:
alcohol & tobacco consumption
Estimates of imputed rentals for homes owner overseas
Alignment of domestic owner occupied housing costs with CPIH in 2010
Gross Fixed Capital Formation (GFCF)
Moderate revision impact throughout, driven by:
Revised deflator for software investment
New treatment of transfer costs associated with non-product assets and changes to the treatment of expenditure on major dwelling repairs
Exports, Imports and Net Trade
Slight impact by BB15 changes driven by:
Changes to treatment of non-monetary gold
Revised treatment of imputed rent on properties held overseas
Correction relating to the insurance industry
Contributions of the components of the expenditure measure of GDP cont’d
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Nominal GDP Changes – income component key findings
Component ImpactCompensation of Employees (CoE)
Relatively minor impact
Operating Surplus of Private Non-Financial Corporations (PNFCs)
Moderate revision impact throughout, driven by:
Exhaustiveness changes
Other income – including mixed income
Moderate revision impact throughout, driven by:
Exhaustiveness changes
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Economic downturn and recovery
26
Economic downturn – BB vintages
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GDP economic downturn
• 2008/09 downturn same length, and almost same depth – was -6.0% and will be -6.1%
• Strength of the recovery has been revised, enabling UK output to re-attain its pre-downturn peak in Q2 2013, one quarter earlier than previously estimated
• However, the recovery remains weak by historical standards
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Annual National AccountsRevisions to Sector Accounts 1997 – 2013
Phillip Davies
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Overview
• Brief summary of the main methods and changes
• Households & NPISH• Net lending/borrowing by sector
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Main Data & Methods Changes
• Gross National Income (GNI):• Estimation of consumption of fixed capital on roads, bridges, etc and road
renewals• Measurement of minor and major repairs and maintenance of dwellings by
owner occupiers• Cross border income• Recording of vehicle registration tax• New NPISH output & intermediate consumption estimates• Exhaustiveness
• ESA 2010:• Reclassification of Network Rail• Reclassification of Transport for London subsidiaries• Reclassification of 3G/4G spectrum sales• Treatment of payable tax credits• Treatment of payments made to multilateral development banks
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Main Household Impacts
Change Transaction ImpactTreatment of NPISH Downward revision to expenditure increasing in later periods
Tax Credits Switch between taxes paid and social benefits
Cross Border Property Income
Small downward revisions to gross operating surplus
Upward revision to expenditure increasing in later periods
Upward revision to net property income increasing in late periods
Exhaustiveness Small downward revisions to gross operating surplus
Large revisions to mixed income (both directions)
Small revisions to compensation of employees
Large upward revisions to expenditure
CPIH alignment Upward revision to expenditure and gross operating surplus from 2010
Household & NPISH: Real Household Disposable Income Growth Rates
33
Household Disposable Income
34
Household & NPISH: Nominal Disposable Income Revisions £bn
35
Household & NPISH: Nominal Disposable Income Revisions £bn
36
Household Implied Deflator
37
Household & NPISH: Saving Ratio
38
Household & NPISH: Net lending/borrowing
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Main PNFC Impacts
Change Transaction & ImpactTreatment of NPISH Downward revision to gross operating surplus; larger in later
periods
Roads Small downward revision to gross operating surplus
Network Rail Small upward revisions to net property income
Larger downward revisions to capital transfer receivable
Larger downward revisions to gross capital formation
3G/4G Small downward revisions to net property income
Large downward revision to acquisitions less disposables in 2000
Cross Border Property Small upward revision to gross operating surplus
Small downward revision to net property income
PNFCs: Net lending/borrowing
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Central Government:
42
Public Corporations:
43
Local Government:
44
Financial Corporations:
45
Households & NPISH Loans :
46
Households & NPISH Loans :
47
Households & NPISH Revisions to Net Worth:
48
Household: Cash Saving Ratio
49
Impact on BoP and IIP (1997 to 2013)
Craig Taylor
Overview
• Background
• Assessment of key changes
• Presentation of impacts
Current Account
Financial Account
International Investment Position
• Next steps
Background
• BoP impact article covering the period 1997 to 2013 published on 11 September 2015
• UK BoP entirely consistent and integrated within UK National Accounts• one of a few key countries where this is the case• GNI reservations impact RoW sector and therefore
Balance of Payments• some other open period revisions
Assessment of Key Changes
Assessment of key changesChange Impact
Withdrawal of income from quasi-corporations (cross border property income)
Primary Income account, Financial Account and IIP (direct investment)- new approach to the measurement of the stock of assets and the associated flows and earnings from rental and imputed rental arising from ownership of second homes by non-residents.
Trade balance- the imports and exports of housing services arising from imputed rental of second-homes by non-residents will be recorded for the first time.
Non-monetary gold Trade balance- new source data fully exploited. Series smoothed enabling the underlying trend in the gold market to be reflected in the trade balance but minimising the volatility on the overall trade balance
Insurance services correction
Trade balance - correction of an error within export of insurance services (impacts 2009 onwards)
Assessment of key changesChange Impact
Exhaustiveness Trade balance - To account for under-coverage of the incomes accruing to small businesses and income concealed by businesses and households through the evasion of taxes. Has an indirect effect on trade in services.
Foreign Direct Investment benchmark
Primary Income account, Financial Account and IIP (direct investment) –quarterly survey results being aligned with annual 2012 and 2013 survey results
Improvement to UK holdings of bonds issued by other sectors
Primary Income account (portfolio investment) - as part of the ONS’ continuous improvement programme, improvements to the coverage of UK holdings of bonds issued by other UK sectors has led to revisions to the amount of receipts allocated to the rest of the world as a residual.
Assessment of key changesChange Impact
Reclassifications Secondary Income and Capital accounts - changes to the treatment of research grants to and from overseas residents
Financial account and IIP – Network Rail
Capital Account and Financial Account – multi-lateral development banks
Other changes:•Non-Profit Institutions Serving Households•Smuggling
Presentation of impacts
Trade balance – 1997 to 2013
Primary income balance – 1997 to 2013
Current account balance – 1997 to 2013
Financial account balance – 1997 to 2013
Net IIP – 1997 to 2013
Next steps
• BoP quarterly release published on 30 September 2015 alongside QNA
• BoP user group to be held on 22 October 2015
• Pink Book 2015 published 30 October 2015