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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. What’s next. Johnson review of price statistics (autumn) Re-weighting of LFS estimates using 2011 Census data (October) – historic data in September
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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
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 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
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