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ONS Economic Forum Email: economicforum@ons.uk Twitter: @ONS # ONSeconomy

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 8 October 2014. What’s new Peter Patterson, Deputy Chief Economic Adviser ONS Economic Forum 8 October 2014.

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ONS Economic Forum Email: economicforum@ons.uk Twitter: @ONS # ONSeconomy

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  1. 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 8 October 2014

  2. What’s new Peter Patterson, Deputy Chief Economic Adviser ONS Economic Forum 8 October 2014

  3. Improvements • Improvements to methods • GNI reservations • Continuous improvement • New international frameworks (ESA 2010, BPM6, MGDD) • New data (from 2010 onwards)

  4. Improvements to methods: Addressing GNI reservations • ‘GNI reservations’ largely about the level of GNI but there is some impact on growth • Articles published on 29 May • Review of Non-Profit Institution serving Households units (NPISH) • Financial Intermediaries Services Indirectly Measured (FISIM) • Illegal Activities • New Cars • Own-account construction • Exhaustiveness adjustments

  5. Improvements to methods: ‘Continuous improvement’ • Gross Fixed Capital Formation • Inventories • Industry reviews

  6. New International Frameworks • ESA 2010 based on SNA 2008 • SNA 2008 already adopted worldwide • ESA 2010 implemented from September 2014 across all EU Member states • Balance of Payments Manual 6 – mainly GDP-neutral • Greater comparability, consistency and relevance

  7. New International Frameworks • R&D • Weapons • Decommissioning costs • Pensions • Small Tools • BPM6 changes

  8. Summary of revisions to GDP • Substantial increase in level of nominal GDP in all years - on average 4.1% higher than before • Little change to average annual real GDP growth 1997-2013 – up 0.1pp from 1.9% to 2.0% • Bigger changes to individual years - range +0.9pp (2009) to -0.9pp (2007) • Slight downward revision to average annual growth 1997-2007, but upward revision (+0.5pp pa) to 2007-2012 . No change to 2013 • Slightly higher growth 1997-2013 is on average entirely due to ESA 2010 changes ... • .. but in 2008-2012 a result of a range of non-ESA changes

  9. Higher levels of nominal GDP

  10. Real GDP growth

  11. Real GDP – 2008-2009 recession • Broad narrative of recession is little changed • Timing and duration of recession unchanged – peak 2008Q1, trough 2009Q2 • Peak-to-trough fall in output revised to 6.0% (previously 7.2%) – remains within broad range of previous estimates of around 6-7% • Remains the deepest UK recession since ONS records began in 1948

  12. Real GDP – recovery since 2009 • Increase in real GDP between 2009Q2 and 2014Q2 revised from 8.0% to 9.3% • Average annual growth rate up from 1.5% to 1.8% • Upward revisions due to a range of factors - changes to investment and inventories, new data, and S&U balancing (2012) • Relatively little impact from ESA 2010 changes (including R&D) • Recovery remains the weakest on record

  13. Comparison of UK recessions Real GDP, index numbers, pre-recession peak = 100 Quarters following pre-recession peaks

  14. Productivity (output per hour)

  15. Changes to fixed investment (GFCF) • Capitalisation of R&D • Capitalisation of military weapons systems • Improvements to own-account construction • Inclusion of expenditure on small tools • New data from ABS for 2011 and 2012 • Decommissioning costs for nuclear power plants • Supply and use balancing adjustments • Reconversion of survey data from SIC03 to SIC07 • Revised data for land improvements • Other annual revisions to data sources

  16. Total fixed investment (GFCF)

  17. Revisions to GFCF by component

  18. Contributions to GDP growth Cumulative contributions of expenditure components to GDP growth since 2009Q2 (percentage points)

  19. Gross operating surplus: PNFCs

  20. Gross operating surplus – financial cos

  21. Real households’ disposable income growth

  22. Changes to households’ saving ratio

  23. Sectoral financial balances: BB14 changes Net lending/borrowing, % of GDP Previously published Blue Book 2014

  24. Current Account: key changes

  25. Current Account: key changes

  26. Current account balance

  27. Revisions to current account balance

  28. International investment position

  29. LFS re-weighting for 2011 Census • Employment level (16+) increased • Employment rate (16-64) virtually unchanged to 2010; from 2010 slightly lower (up to 0.2pp) • Unemployment level (16+) slightly higher but rate (16+) virtually unchanged • Inactivity level (16-64) increased • Inactivity rate (16-64) virtually unchanged to 2010; from 2010 slightly higher (up to 0.2pp)

  30. LFS re-weighting for 2011 Census

  31. Contributions to productivity growth

  32. Output growth by sector

  33. Job-to-job moves by reason

  34. Job-to-job moves by occupation type

  35. CPI inflation by import intensity 85 class level components of CPI according to degree of import penetration in household consumption

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