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Content of UK National Accounts: the Blue Book 2012

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Summary

The Quarterly National Accounts consistent with Blue Book 2012 (BB12) and Pink Book 2012 (PB12) will be published on 28 June 2012.

BB12 and PB12 will be published on 31 July 2012.

In line with ONS policy, this article is intended to inform users about the content of these publications, including forthcoming changes, and outlines future plans for subsequent Blue Books.

Background

Definitive estimates of GDP are produced at the Blue Book stage by reconciling and balancing annual estimates of expenditure, income and production in current prices through the input-output framework.

The input-output framework consists of the regularly produced supply and use tables and input-output analytical tables.

The supply and use tables are compiled around 18 months after the year in question, when comprehensive information on expenditure, income and production becomes available.

The expenditure, income and production approaches are based on different survey and administrative data sources, and each produces estimates that, like all statistical estimates, are subject to errors and omissions.

Accordingly, the three measures produce different estimates, although theoretically they should be the same. A single, definitive, GDP estimate can only emerge therefore after a process of balancing and adjustment.

Supply and use tables are constructed to show a balanced and complete picture of the flows of products in the economy and illustrate relationships between producers and consumers of goods and services.

In addition, they show the interdependence between industries: what industries either purchase from one another or import to produce their output.

The supply and use tables are the basis on which input-output analytical tables (IOATs) are constructed. IOATs describe how different goods and services are used in the production of other goods and services. They are used to measure how changes in demand for one product can filter through to the rest of the economy.

Blue Book 2011 (BB11) introduced significant changes to the way the National Accounts are produced in the UK:

  • It was the first time that the National Accounts were published using the Standard Industrial Classification 2007 (SIC2007)

  • It was the first time that the National Accounts were published using the Classification of Product by Activity2008 (CPA 2008)

  • BB11 introduced improved deflation methods, including replacing the Retail Prices Index with the Consumer Prices Index where appropriate

  • BB11 made extensive use of a new IT platform

It is planned that BB12 will consolidate these developments and return to publishing the Quarterly National Accounts (QNA) consistent with Blue Book in June, as is normal practice for a Blue Book with few major changes.

Planning

In planning the scope and content of BB12 the ONS has also considered future Blue Books to be published in 2013 and 2014. The scopes of these Blue Books are also outlined.

The need for coordinated plans across 2012 to 2014 is to meet our international obligations that will be required with the establishment of a new European System of Accounts (ESA10) expected to be introduced by September 2014.

Therefore, to introduce the new ESA and provide users with information on the impact, we plan to produce BB12 with a very limited number of revisions, with the only significant methodological change being new insurance measurement.

We currently plan to produce Blue Book 2013 (BB13) with an open revisions period from 1997 and introduce other non-ESA driven methodological improvements, potentially including improved measurement of bonds, introducing Whole of Government Accounts, improved reconciliation with Public Sector Finances, and better rental estimates.

This should allow Blue Book 2014 (BB14) to be produced that reflects the key ESA10 changes (see below for details).

Scope of Blue Book 2012

The scope and timing of the Blue Book in 2012 will be:

  • the Quarterly National Accounts consistent with the 2012 Blue Book dataset will be published on 28 June 2012

  • Balance of Payments consistent with the 2012 Pink book dataset will be published on 28 June 2012

  • BB12 and PB12 will be published on 31 July 2012

  • the reference year will be 2009 = 100

  • the last base year for the chained volume measure of GDP will be 2009

  • a very limited revisions policy will be used in 2012. 2009 and 2010 will be fully open for revision.  Limited revisions back to 1997 will be introduced to address some anomalies from BB11

  • a new method for measuring insurance will be introduced (see Methodology section for details).

The content of the BB12 publication will include:

  • Part 1 - Main aggregates and summary accounts

  • Part 2 - Industrial analyses

  • Part 3 – Sector accounts, including non-financial corporations, financial corporations, general government, households and non-profit institutions serving households (NPISH) and rest of the world

  • Part 4 – Other analyses and derived statistics

  • Part 5 – UK Environmental Accounts

Methodology changes

The annual Blue Book provides an opportunity to review and amend methods.

As noted earlier, the strategy was to limit the amount of revisions introduced in BB12 with the exception being new methods for calculating insurance.

Insurance

The one significant methodological change that will be introduced in BB12 relates to the measurement of insurance services.

The previous methodology did not fully reflect conventions set out in the European System of Accounts 1995 (ESA95). The new method will fully comply with the ESA95 and Eurostat Task Force guidance.

The new series will be fully accruals based for both life and non-life insurance services, and incorporate reinsurance services for the first time.

The series are calculated using regulatory Financial Services Authority (FSA) information and Lloyd’s of London information for Lloyd’s syndicates.

The new series have been calculated back to 1995. There will be an impact on output, intermediate consumption, household consumption and imports and exports.

Also, to reflect the new methods and source data changes, there will be new series for three distributive transactions in the non-financial accounts: property income attributed to insurance policy holders; net non-life insurance premiums; non-life insurance claims.

A more detailed article describing methodological and source data changes and their impact is planned to be published in April 2012.

Revisions

The introduction of new data and methodological changes into the National Accounts is carefully managed.

Revisions for the most recent two years reflect a range of routine annual revisions, including the annual benchmarking exercise to incorporate new and revised data.

In Blue Book 2012, 2010 will be balanced through the input-output supply and use framework for the first time and 2009 will be fully rebalanced.

The years 1997-2008 will only be revised to introduce minor revisions to address some methodological anomalies introduced in BB11 and to incorporate the improved insurance methodology.

Therefore, the number of revisions to BB12 will be very limited.  This is largely as a result of a nine-month production round and to allow ONS to consolidate processes after the significant changes introduced in BB11.

Regional Accounts

The Regional Accounts statistical bulletin ‘Regional, Sub-regional and Local Gross Value Added 2011’ is planned for release in December 2012.

Estimates will be provided using the revised NUTS geographic boundaries for the first time at NUTS 1 (regional), NUTS2 (sub-regional) and NUTS3 (local area) levels; with a 20-industry breakdown at NUTS1 and NUTS2.

For NUTS3, a 10-industry breakdown will be produced.  Data will be presented for total GVA, GVA per head of population and GVA per head indices.

Scope of Blue Book 2013

Blue Book 2013 will be partly constrained by the time requirements introduced to allow for the production of Blue Book 2014 to facilitate the introduction of ESA10.

BB13 will focus on the introduction of approved methodological improvements and the introduction of tested new systems in readiness for the introduction of ESA10.

BB13 will effectively be a 12-month timetable:

  • Quarterly National Accounts consistent with BB13 is planned to be published end June 2013

  • BB13 is planned to be published end July 2013

  • The reference year will be 2010 = 100

  • The last base year for the chained volume measure of GDP will be 2010

ONS currently plans to produce BB13 with revisions taken on from 1997 and to introduce other non-ESA driven methodological improvements, potentially including improved measurement of bonds, introducing Whole of Government Accounts, improved reconciliation with Public Sector Finances, and better rental estimates.

The period from 2008 to 2011 will be fully open to rebalance through the supply and use framework, as well as other revisions.

In 2013, Blue Book will become a web-based publication. As a result, BB13 will introduce changes to the layout and presentation of tables following user consultation. Users are invited to take part in our Blue Book user survey.

A related development will be the production of current price input-output analytical tables (IOATs). 

These were last produced in 2011 for the year 2005 on a Standard Industrial Classification 2003 (SIC 2003) basis. It is currently planned to update these tables to a SIC 2007 basis in 2013 based on 2008 data.

Scope of BB14

Blue Book 2014 will focus on the introduction of ESA10 and the IMF Balance of Payments Manual volume 6 (BPM6) and the updating of the Producer Price Indices used in deflation.

The time period available for the production of Blue Book 2014 will need to be maximised to allow sufficient time for the production and quality assurance of estimates because of the introduction of ESA10 and BPM6.

Therefore, it is proposed that BB14 will be on a 15-month timetable.

In 2014:

  • Quarterly National Accounts consistent with BB14 is planned to be published on 30 September 2014

  • BB14 is planned to be published on 31 October 2014

  • The reference year will be 2011 = 100

  • The last base year for the chained volume measure of GDP will be 2011

Producer Price Indices (PPI's) are currently undertaking their five-yearly rebasing exercise.

ONS’s current plan is to publish PPIs rebased to 2010 = 100 in autumn 2013. It is normal practice in the UK for the National Accounts to adopt the rebased PPIs as soon as is practicable.

Given that the Blue Book for 2013 is planned to be in June, the rebased PPIs will not be available in time to incorporate them in Blue Book 2013. Therefore, re-based PPIs will be incorporated in Blue Book 2014.

For the early years (prior to 2010) Blue Book 2014 will only incorporate revisions associated with the implementation of ESA10 and BPM6 and rebased PPIs.

Key issues and changes that will result from the move to an ESA10 basis include the capitalisation of Research and Development; improved treatment of financial instruments and assets; new recording of pension schemes; capitalisation of military expenditure; and goods sent abroad for processing. 

Additional detail will be provided regarding these and other changes prior to the publication of BB14 and updates will be available.

Conclusion

ONS carefully manages and plans the introduction of new data and methodological changes into the National Accounts.

As part of the planning process, ONS regularly considers the scope of Blue Books for the next and consequent years.

Current plans were developed to ensure a structured development plan that will lead to the introduction of ESA10 and BPM6 in the 2014 Blue Book.

Prior to that, the 2012 and 2013 Blue Books plan to introduce some methodological improvements covering the measurement of the insurance industry (in BB12), potentially followed by improved measurement of bonds, the introduction of Whole of Government Accounts, improved reconciliation with Public Sector Finances and better rental estimates in BB13.

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