A guide to National Accounts and GDP

The national accounts is a central framework for the presentation and measurement of the stocks and flows within the economy.

This framework provides many key economic statistics including Gross Domestic Product (GDP) and Gross National Income as well as information on, for example, saving and disposable income.

The national accounts make sense of the complex activity in the economy using two main groupings: t

• the participants of the economy (the 'who') and

• their transactions with one another (the 'what')

Units are the individual households or legal entities, such as companies, which participate in the economy. These units are grouped into sectors, for example the Financial corporations sector, the Government sector and the Household sector. The economic transactions between these units are also defined and grouped within the accounts. Examples of transactions include:

• government expenditure

• interest payments

• capital expenditure

• a company issuing shares

The national accounts framework brings these units and transactions together to provide a simple and understandable description of production, income, consumption, accumulation and wealth. These accounts are constructed for the UK economy as a whole, as well as for the individual sectors in the Sector Accounts.

Estimates are published quarterly in the National Statistics publication UK Economic Accounts and Quarterly National Accounts. Annual figures are published in the UK National Accounts (The Blue Book).

Guide to Gross Domestic Product: Measuring the UK's economic activity

Gross Domestic Product (GDP) is an integral part of the UK national accounts and provides a measure of the total economic activity in a region.

GDP is often referred to as one of the main 'summary indicators' of economic activity and references to 'growth in the economy' are quoting the growth in GDP during the latest quarter.

In the UK three different theoretical approaches are used in the estimation of one GDP estimate:

• GDP from the output or production approach - GDP(O) measures the sum of the value added created through the production of goods and services within the economy (our production or output as an economy). This approach provides the first estimate of GDP and can be used to show how much different industries (for example, agriculture) contribute within the economy.

• GDP from the income approach - GDP(I) measures the total income generated by the production of goods and services within the economy. The figures provided breakdown this income into, for example, income earned by companies (corporations), employees and the self employed.

• GDP from the expenditure approach - GDP(E) measures the total expenditures on all finished goods and services produced within the economy

The estimates are 'Gross' because the value of the capital assets actually worn away (the 'capital consumption') during the productive process has not been subtracted.

Estimates for GDP cover calendar years and quarters and the publication dates are available well in advance. Annual estimates are published in late summer as part of the UK National Accounts. Quarterly estimates are published more frequently and are updated with more information as it becomes available each month.

For example, GDP estimates for the first quarter of the year - Q1: January, February and March - will become available:

• 1st estimate: Preliminary estimate of GDP - based on information on output - published 3.5 weeks after the end of the quarter. Provides the first estimate of growth in GDP.

• 2nd estimate: Second Estimate of GDP - based on information from all approaches - published eight weeks after the end of the quarter. Provides information on the level of GDP as well as the growth in GDP.

• 3rd estimate: UK National Accounts - the full national accounts - published 12 weeks after the end of the quarter

Content from the Office for National Statistics.
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