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ONS Economic Forum Email: economicforum@ons.gov.uk Twitter: @ONS # ONSeconomy Website: http://www.ons.gov.uk/ons/about-ons/get-involved/events/events/economic-forum/index.html 10 July 2014. ONS Economic Forum - Agenda. 09.45 Introduction 10.00 NSQR of NA & BoP 10.30 What’s new
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ONS Economic Forum Email: economicforum@ons.gov.ukTwitter: @ONS #ONSeconomy Website: http://www.ons.gov.uk/ons/about-ons/get-involved/events/events/economic-forum/index.html 10 July 2014
ONS Economic Forum - Agenda 09.45 Introduction 10.00 NSQR of NA & BoP 10.30 What’s new 10.45 What’s next 11.15 Coffee break 11.45 Recent trends in self-employment 12.30 Close
Introduction John Pullinger, National Statistician ONS Economic Forum 10 July 2014
National Statistics Quality Review No 2National Accounts and the Balance of Payments Kate Barker Lead Reviewer July 10 2014 ONS Economic Forum
Rationale and Terms of Reference • Commissioned by ONS (not UKSA) • Time elapsed since last review of this type • Terms of reference: - user needs and priorities - basic compilation following Pickford - risks in coverage and collection - existing quality assurance at ONS • Not a review of recent data trends
People and Process • Statistical lead – Art Ridgeway, ex Stats Can • ONS: Adrian Chesson, PriyaMistry • ONS discussions/UKSA consultation • User consultations – city, academics, journalists • Messages positive and negative – but also lack of knowledge about ONS and methods
Previous National Accounts Reviews • Key: Pickford 88/89; Allsopp 03/04; Caplan 03 • Pickford – merger of economic statistics, survey improvements • Allsopp – improvements to regional data, further survey recommendations • Caplan - integrated supply/use framework, common deflators • Some recommendations adopted then reversed • Positive developments on service sector coverage
National Accounts Estimates • Urgent reinstatement of Purchases Survey or alternative data source • With SUT at PYP develop double deflation • Adjust more than services industries to bring output measure into line • Consider ways to reduce workload of quarterly estimates and annual benchmarking
Other statistical issues • Work with BoE on Flow of Funds • Support new unit focused on deflation • Improve deflators for GFCF • Improve the IDBR • Improve access to administrative data • Importance of systems constraints
Quality Assurance and Communication • Users complimentary about response to inquiries/press releases • Economic Forum and preparation for ESA10 • Need to be transparent if QA not adequate • Stronger sign-off procedures for outputs • Consider all users not just key ones • The website.......
Summary • Work of National Accounts inevitably complex and needs to be continuous focus on methods • Processes not always well-explained to users • Workload pressures with ESA10 and other new demands • Overall the National Accounts of a good standard • Important that improvements not reversed
What’s new Peter Patterson, Deputy Chief Economic Adviser ONS Economic Forum 10 July 2014
Contributions to expenditure growth (1) 1981-1985 1991-1996
Net capital stocks 2012 = £1.4 trillion , CVM (2010 reference year)
What’s next Peter Patterson, Deputy Chief Economic Adviser Graeme Walker, Head of National Accounts ONS Economic Forum 10 July 2014
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
Improvements to National Accounts in September 2014 Graeme Walker Head of National Accounts ONS Economic Forum: 10 July 2014
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
Improvements • New international frameworks (ESA 2010, BPM6, MGDD) • Improvements to methods • New data (not relevant for period up to 2009)
New International Frameworks • R&D • Weapons • Decommissioning costs • Pensions • BPM6 changes • 10 June articles
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
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
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
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
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
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)
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
Balance of Payments (BoP) • Biggest change - measurement basis of direct investment profits for monetary financial instructions 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
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
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
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
Questions • Email: graeme.walker@ons.gov.uk