The Office for National Statistics (ONS) has today published an article setting out the impact on current price, or nominal, gross domestic product (GDP) of improvements to the UK National Accounts that will be introduced when revised figures, consistent with the 2017 Blue Book, are published on 29 September 2017.
The total net impact of the improvements announced today increase the level of current price GDP in 2012 by approximately £10.2 billion or 0.6%. Average annual growth in current price GDP between 1997 and 2012 has been revised downwards by 0.1 percentage points, from 4.0% to 3.9% per year.
The main improvements announced today are:
A new approach for estimating private actual rents, aligning it with the method used to estimate imputed rents that was introduced in the 2016 Blue Book. The impact on the level of current price GDP from this change ranges from £5.1 billion in 2004 to £9.0 billion in 2009. The largest impact on current price GDP growth is in 2003 where growth is reduced by 0.2 percentage points.
Further improvements to the method for estimating imputed rentals. The impact on current price GDP levels ranges from £2.1 billion in 1997 to £5.3 billion in 2006. The impact on current price GDP growth is relatively small: 2001 and 2012 are revised up by 0.1 percentage points and 2007 is revised down by 0.1 percentage points. All other revisions to annual growth in GDP are less than positive or negative 0.1 percentage points.
Survey improvements in the calculation of gross fixed capital formation, including the removal of an element of double-counting within purchased software data and improvements to the estimates of artistic originals. The combined impact of these changes ranges from negative £0.6 billion in 1999 to negative £4.2 billion in 2001. The largest impact on current price GDP growth is in 2001 where growth is reduced by 0.2 percentage points.
An improvement to the method of estimating transfer costs associated with buying a home, such as Stamp Duty, due to the introduction of the new, improved, UK House Price Index. Additionally the introduction of transfer costs associated with the buying and selling of sports players has a very small impact. The impact of these changes to transfer costs ranges from negative £0.4 billion in 1998 and 2000 to negative £1.4 billion in 2004. The transfer cost changes have a minimal impact on GDP current price growth with only 2004 showing a 0.1 percentage point impact.
Other smaller changes to total GDP include the introduction of better sources for the measurement of the household and “not for profit institutions serving households” (NPISH) sector, which are being separated for the first time in the 2017 Blue Book. In addition, improved methods for estimating unfunded public sector pensions, the number of illegal drugs users, tax fraud and BBC subsidiaries are also being introduced. However, these changes all have very small impacts on both the level and growth of current price GDP.
ONS Chief Economist Nick Vaughan said:
“These new figures are part of the ongoing process of ensuring ONS continues to measure the changing, digital economy in the best way possible, using the best available sources of data and meeting the best internationally-agreed standards.”