Estimates of the size and growth of the UK Non-Financial Business Economy, based on the local activity of businesses as measured by the Annual Business Survey (ABS), are presented in this release. It is the key resource for understanding the detailed structure, conduct and performance of businesses across the UK at a regional level. The release covers:
Non-Financial Services (includes professional, scientific, communication, administrative, transport, accommodation and food, private health and education, and entertainment services);
Distribution (includes retail, wholesale and motor trades);
Production (includes manufacturing, oil and gas extraction, and energy generation and supply);
parts of Agriculture (includes agricultural support services, forestry and fishing).
Together these industries represent the UK Non-Financial Business Economy and account for around two-thirds of the whole economy of the UK in terms of Gross Value Added. Public administration and defence, public sector health and education, finance and parts of agriculture make up the difference between the UK Non-Financial Business Economy and the whole economy.
Regional ABS estimates are produced by apportioning the survey return from each enterprise to its individual sites, with these then being summed to the regional level. For the national ABS results, industry breakdowns are obtained by classifying enterprises to industries. For the regional ABS results, this classification is done for individual sites, so industry breakdowns at the UK level in the national release will not necessarily match those in the corresponding regional release. For example an enterprise contributing wholly to Production at the national level may have local units contributing to other sectors (e.g. Wholesale) at the regional level. More information can be found under Regional apportionment in background note 9 of this release.
The ABS has included estimates for the Insurance & reinsurance industries (SIC 2007 Groups 65.1 and 65.2 respectively) in its UK Regional releases since 2008. This is the only part of Financial and Insurance Activities (Section K) covered by the survey. As with any new time-series, estimates for these industries have remained experimental while ongoing quality assurance has taken place. This quality assurance has led the figures to be revised substantially in recent years with a resulting break in the series between 2009 and 2010. Due to ongoing volatility the estimates for this series have been removed from this release to allow for a more detailed quality assessment to be undertaken. The removal of these series does not affect other industries published as part of this release and has no impact on any other financial statistics published by ONS.
Although the estimated total for the UK Business Economy in the regional ABS results is constrained to equal that in the corresponding national ABS results, the published totals for the UK Non-Financial Business Economy will not now be the same following the removal of data for the Insurance & reinsurance industries (Groups 65.1 and 65.2) from the regional results after apportionment has taken place.
As a result, an enterprise contributing wholly to Insurance & reinsurance at the national level (and therefore removed from the national totals) may have local sites in other industries which will still contribute to the regional totals. Likewise, an enterprise contributing wholly to the Distribution sector (and therefore included in the national totals) may have a local site in Insurance & reinsurance whose contribution will be removed from the regional totals.
Estimates published in this release include turnover, purchases, approximate Gross Value Added at basic prices (aGVA) and employment costs. All data are reported at current prices (effect of price changes included).
Where the recession is mentioned it refers to the contraction of GDP that started in 2008, the year from which a consistent ABS time series is available. For more information about the survey see the background notes.
The ABS has a wide range of uses: for example, ABS statistics are essential contributors to the UK National and Regional Accounts, including the measurement of Gross Domestic Product (GDP), they are supplied to Eurostat to meet the requirements of the European Structural Business Statistics (SBS) Regulation, and are used by the devolved administrations and central and local government to monitor and inform policy development. For other uses see background note 4.
Questions often asked of the ABS release are ‘What is aGVA’ and ‘How does the measure of aGVA differ from the GVA measure in the National and Regional Accounts?’ For an overview of aGVA please see our new infographic on ‘What is aGVA?’. National Accounts carry out coverage adjustments, conceptual adjustments and coherence adjustments, in turn these estimates are used in the Regional Accounts. The National and Regional Accounts estimate of GVA uses input from a number of sources, and covers the whole UK economy, whereas ABS does not include farming, financial or public sectors. ABS total aGVA is around two-thirds of the National Accounts whole economy GVA because of these differences. For further information on aGVA, see background note 9. There is also a more detailed article ‘ A Comparison between ABS and National Accounts Measures of Value Added (462.3 Kb Pdf) ’ available on the ABS webpages.
ONS makes every effort to provide informative commentary on the data in this release. Where possible, the commentary draws on evidence from businesses or other sources of information to help explain possible reasons behind the observed changes. However, it is difficult for businesses to provide detailed reasons for movements which are specific to a region, for example, businesses may state a ‘change in the nature of business activity across all sites’. Consequently, it is not possible for all data movements to be fully explained at a regional level. Users may benefit from reading the commentary in this release in conjunction with that in the ABS UK Non-Financial Business Economy, 2012 Revised Results (national level) release, published on 12 June 2014. As the ABS regional estimates are produced by apportionment of the national results to a local level, all industry information noted in the National release will apply.
We constantly aim to improve this release and its associated commentary. We would welcome any feedback you might have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: email@example.com or telephone Daniel Ayoubkhani on +44 (0)1633 456391.
A mapping tool is available for viewing these results, by region and the UK as a whole. The mapping tool can be used to illustrate how aGVA, turnover, purchases and employment costs have changed across the regions from 2008 to 2012, as well as enabling comparisons with other regions.
In 2012, the income generated by local activity of Non-Financial businesses in the UK, less the cost of goods and services used to create this income, was estimated to be £935.7 billion. This amount represents the approximate Gross Value Added at basic prices (aGVA) of the UK Non-Financial Business Economy at a local activity level. Between 2011 and 2012 aGVA increased by 2.0% (£18.5 billion); a continuation of the recovery seen between 2009 and 2011 although at a slower rate. This increase resulted in aGVA being above the level seen at the start of the recession, in 2008, for the second consecutive year.
The main drivers of aGVA are:
1. Turnover (the main component of income);
2. Purchases (the main component of the consumed goods and services).
The consecutive annual increases seen in aGVA are a result of similar consecutive increases in both turnover and purchases. Turnover increased by 2.3% (£73.9 billion) between 2011 and 2012, while purchases of goods, materials and services increased at a lower rate of 1.9% (£44.9 billion), resulting in an aGVA growth rate that was slightly lower than that for turnover. As with aGVA, turnover and purchases were above levels seen in 2008, at the start of the recession, for the second consecutive year.
The recession and recovery described by the ABS between 2008 and 2012 is broadly in line with Gross Domestic Product (GDP) figures published in the National Accounts. Both the ABS aGVA estimates and the National Accounts GDP estimates show a fall between 2008 and 2009 and then three consecutive annual increases from 2009 to 2012.
The Non-Financial Service sector, the largest broad industry group, contributed most to overall growth. Non-Financial Service sector aGVA rose by £27.4 billion (5.6%) between 2011 and 2012, the third consecutive annual increase taking it to £513.5 billion, which is above the level seen in 2008 (see Figure 1).
Due to the need to balance timeliness of the data with the accuracy, in-line with the ABS Revisions Policy, 2011 ABS regional results were published in July 2013 with further quality assurance then leading to planned revisions to the data in this release.
These revisions usually arise from the receipt of additional data and the correction of existing data by businesses responding to the ABS, which may include restructures that can result in data being reallocated to a different industry.
At the UK level, aGVA generated by local activity of businesses in the UK Non-Financial Business Economy for 2011 was revised downwards by 2.2% (£20.7 billion). The downward revision has been spread across all 12 regions following continued quality assurance of the data.
A list of industries which are included in the ABS measure of the UK Non-Financial Business Economy, can be found in background note 9.
The industrial composition of regions in the UK varies considerably (see Figure 2). Wales and Scotland show a similar contribution to their aGVA from both the Non-Financial Service and Production sectors (each around two-fifths of their respective aGVAs in 2012) while other regions such as London have a dominant Non-Financial Service sector (around three-quarters of its aGVA in 2012) with a smaller share of value added being generated from Production and other sectors.
The largest three regions in terms of total aGVA were London, the South East and the North West, together contributing just under half of total aGVA in the UK Non-Financial Business Economy (see Figure 3).
Of the 12 regions, 8 saw growth in aGVA between 2011 and 2012, with the South East, the East Midlands and London contributing most to overall growth between 2011 and 2012 (see Figure 4).
Five regions saw a third consecutive year of growth in 2012, following falls between 2008 and 2009. Despite this, the sub-national picture remains mixed with aGVA in five of the regions remaining below levels seen in 2008, at the start of the recession.
The South East contributed the most to aGVA growth in the UK Non-Financial Business Economy between 2011 and 2012, increasing by £9.2 billion (6.5%) (see Figure 4). Growth was dominated by the Non-Financial Service sector (Sections H-S), the South East’s largest industry group in terms of aGVA, contributing £8.7 billion to the region’s total aGVA growth (a rise of 10.8%).The two main drivers within the Non-Financial Service sector were Professional, scientific & technical activities (Section M) and Administration & support service activities (Section N).
This is the third consecutive year of aGVA growth for the South East, with the region making the largest contribution to national aGVA growth between 2008 and 2012, a rise of £13.8 billion.
The East Midlands made the second largest contribution to aGVA growth in the UK Non-Financial Business Economy between 2011 and 2012, increasing by £4.5 billion (8.3%). This was driven by its Production sector (Sections B-E) which contributed £2.7 billion to the region’s total aGVA growth (a rise of 15.6%). The largest increase was in Manufacturing (Section C).
This was the third consecutive year of positive aGVA growth for the East Midlands, with the annual growth in aGVA standing at over £4.5 billion in both 2011 and 2012. The latest increase means that aGVA in the East Midlands has grown by £7.4 billion (14.3%) over the level recorded in 2008 at the start of the recession, the second largest contribution to growth of all 12 regions.
London’s aGVA grew by £3.1 billion (1.5%) between 2011 and 2012. This was led by the Non-Financial Service sector (Sections H-S) which contributed £6.5 billion (a rise of 4.2%). The two main sector drivers were Professional, scientific & technical activities (Section M) and Administration & support service activities (Section N).
Approximate GVA for the Distribution sector (Section G) continues to decrease in the region in 2012, the fourth consecutive fall since the level recorded in 2008, at the start of the recession. The fall in aGVA for this sector has offset the large growth seen in the Non-Financial Service sector (Sections H-S), making London the third largest region in terms of contribution to growth in the UK Non-Financial Business Economy between 2011 and 2012.
Scotland has shown the largest fall in aGVA (£2.8 billion) between 2011 and 2012 following an increase recorded between 2010 and 2011. The rise between 2010 and 2011 and the fall between 2011 and 2012 are driven by the Production sector (Sections B-E) and the Distribution sector (Section G) in Scotland, although the change without industry restructures and reclassifications would have been less pronounced (see Structural Changes to Businesses in background note 9).
Approximate aGVA in Scotland for the Non-Financial Service sector (Sections H-S) increased by £2.7 billion (8.7%) between 2011 and 2012, the second consecutive increase. Despite the positive movement in this sector, overall aGVA for Scotland has yet to return to a level above that recorded at the start of the recession.
Between 2011 and 2012, turnover in the Non-Financial Service sector increased at a greater rate than purchases (4.7% and 2.7% respectively). This was the main driver in the resulting aGVA increase of 5.6% (£27.4 billion). For further details on the components of aGVA see Calculation of Gross Value Added estimates in background note 9.
This was the third consecutive annual increase in aGVA, with the 5.6% growth rate the same as the previous period. This is the only sector where aGVA in 2012 was above the level seen at the start of the recession.
The largest contribution to the growth between 2011 and 2012 came from Professional, scientific & professional services (Section M) which increased by £9.9 billion, an 8.0% increase for the section.
London and the South East made the largest contribution to aGVA in the Non-Financial Service sector in 2012 (see Figure 5).
The ABS has included estimates for the Insurance & reinsurance industries (SIC 2007 Groups 65.1 and 65.2 respectively) in its UK Regional releases since 2008. This is the only part of Financial and insurance activities (Section K) covered by the survey. As with any new time-series, estimates for these industries have remained experimental while ongoing quality assurance has taken place. This quality assurance has led the figure to be revised substantially in recent years with a resulting break in the series between 2009 and 2010. Due to ongoing volatility the estimates for this series have been removed to allow for a more detailed quality assessment to be undertaken. The removal of these series does not affect other industries published as part of this release and has no impact on any other financial statistics published by ONS.
All regions other than Northern Ireland saw increases in aGVA in the Non-Financial Service sector between 2011 and 2012, with the South East, London and Scotland making the largest contributions to aGVA growth (see Figure 6).
The South East made the largest contribution to growth in aGVA in the Non-Financial Service sector between 2011 and 2012, contributing £8.7 billion, a rise of 10.8% for the region. This is the fourth consecutive annual increase in aGVA, with the growth rate between 2011 and 2012 higher than in previous periods.
The three main sector drivers of growth between 2011 and 2012 were Professional, scientific & technical activities (Section M), Administration & support service activities (Section N) and Information & communication (Section J), contributing £3.6, £2.3 and £1.8 billion respectively to the increase in the South East’s aGVA.
The increase within Professional, scientific & technical activities was driven by Scientific research & development (Division 72), Activities of head offices; management consultant activities (Division 70) and Legal & accounting activities (Division 69).
For Administration & support service activities the drivers were Office administrative, office support & other business support activities (Division 82) and Rental & leasing activities (Division 77), where general increases in business activity were reported. Employment activities (Division 78) also contributed to the sector rise, which may be a result of businesses being more likely to recruit temporary rather than permanent staff as a result of continued economic uncertainty.
The increase in Information & communication activities was driven by Computer programming, consultancy & related activities (Division 62).
London made the second largest contribution to growth in the Non-Financial Service sector between 2011 and 2012, contributing £6.5 billion to the total aGVA increase, a rise of 4.2% for the region.
In London, the Non-Financial Service sector has recorded three consecutive years of annual growth above the level recorded in 2008 and continues to be both the dominant sector in terms of total aGVA contribution and growth in the region.
As in the South East, the three main sector drivers of growth in the Non-Financial Service sector between 2011 and 2012 were Professional, scientific & technical activities (Section M), Administration & support service activities (Section N) and Information & communication (Section J), contributing £4.2, £2.1 and £1.7 billion respectively to the increase in London’s aGVA.
Scotland contributed £2.7 billion to total aGVA growth in the Non-Financial Service sector between 2011 and 2012 (a rise of 8.7% for the region). It is the only sector to record growth between 2011 and 2012 in the region, a different picture than between 2010 and 2011 where three of the five broad industry sectors recorded growth.
The Non-Financial Service sector’s growth in aGVA in Scotland was apparent for all but one industrial section, but was driven by the increase in Professional, scientific & technical activities (Section M), which accounted for over a third of the total growth in the sector.
The largest increase in aGVA within Professional, scientific & technical activities was seen in Architectural & engineering activities; technical testing & analysis (Division 71) which increased by £0.5 billion (a 13.6% increase for the region) following a fall in the previous period. Businesses have reported that their project based activities commonly produce volatility in profit for the industry.
Both turnover and purchases in the Production sector have decreased between 2011 and 2012 (0.8% and 0.9% respectively). These are the main components in the resulting fall in aGVA of 0.7% (£1.4 billion). For further details on the components of aGVA see Calculation of Gross Value Added Estimates in background note 9.
The rate at which aGVA has fallen between 2011 and 2012 is relatively small when compared to the growth rates recorded for the sector over the two previous periods (5.9% between 2009 and 2010 and 4.8% between 2010 and 2011). The level of aGVA remains below the level recorded at the start of the recession.
The decline in aGVA between 2011 and 2012 was driven by Mining & quarrying (Section B) which decreased by £5.3 billion, a 17.0% decrease for the section. At the local unit level this is the only section within Production that has declined between 2011 and 2012. This large decrease has been offset by increases in all other sections within Production, with Manufacturing (Section C) and Energy generation & supply (Section D) increasing by £2.5 billion and £1.4 billion respectively.
At the regional level the largest contributions to Production sector aGVA in 2012 were in Scotland, the North West and the South East (see Figure 7).
In the Production sector there are an equal number of regions showing growth as those showing a fall in aGVA between 2011 and 2012. Scotland shows the largest decrease with the East Midlands showing the largest growth over the period (see Figure 8).
Across the Production sector many divisions have been affected by a trend amongst multinational companies towards restructuring on an international basis. Such restructuring has caused companies to be classified under different sectors to those they have historically occupied, with movements from traditional production industries towards wholesalers and toll processors. Therefore care should be taken when making comparisons over time.
Scotland contributed £3.2 billion to the total aGVA decrease in the Production sector between 2011 and 2012, a fall of 8.6% for the region. Following two consecutive years of growth, the decline in 2012 has returned aGVA to a level just above that reported in 2009 and it continues to remain below the recorded at the start of the recession.
The aGVA decrease is dominated by the fall seen in Mining & quarrying (Section B), driven by Extraction of crude petroleum & natural gas (Division 06). This division contributed £4.4 billion to the decrease in aGVA, a fall of 23.8% for the region between 2011 and 2012. This followed two consecutive periods of annual growth between 2009 and 2010 and between 2010 and 2011. Businesses have reported the volatility of oil prices and associated stock levels as the main factor in both the growth and decline shown over time. Prolonged periods of maintenance to offshore oil rigs may have also contributed to the more recent decline.
Turnover in the Distribution sector increased more slowly than purchases between 2011 and 2012 (2.2% compared with 2.9%). Additionally, the sector recorded a reduction in stocks and an increase in taxes which together have combined to decrease aGVA by 6.4% (£9.4 billion) over the period. For further details on the components of aGVA see Calculation of Gross Value Added Estimates in background note 9.
The £9.4 billion fall in aGVA between 2011 and 2012 is a continuation of the decline shown in this sector since the start of the recession in 2008. At 6.4%, the rate of the decrease is greater than that recorded between both 2009 and 2010 (0.4%) and 2010 and 2011 (1.3%).
Wholesale (excluding Motor trades) (Division 46) dominated the decrease in aGVA within the sector, contributing £8.7 billion to the fall (a 15.1% decrease for the industry). Performance for this industry group is volatile as it is heavily influenced by changes in oil prices. The high oil prices in 2011 have continued into 2012 and wholesalers may have been reluctant to pass the higher prices onto their customers.
At the regional level, the South East and London made the largest contribution to Distribution sector aGVA in 2012 (see Figure 9).
Of the 12 regions, 9 saw a fall in aGVA in the Distribution sector between 2011 and 2012, with the largest contributions to the UK decrease coming from London, Scotland and the East of England (see Figure 10). The wholesale industry has driven the decrease in aGVA within these regions, although the change without industry restructures and reclassifications would have been less pronounced.
Across the Distribution sector some divisions have been affected by a trend amongst multinational companies towards restructuring on an international basis. Such restructuring has caused companies to be classified under different sectors to those they have historically occupied, with movements from traditional production industries towards wholesalers and toll processors. Therefore care should be taken when making comparisons over time.
London contributed £3.5 billion to the total fall in aGVA in the Distribution sector between 2011 and 2012, a 15.3% decrease for the region. This is a continuation of the decline in this sector, with aGVA in 2012 being £17.1 billion below that in 2008. Wholesale (excluding Motor trades) (Division 46) contributed £3.3 billion to the decline in London, a fall of 34.1% for the region, where some industry restructuring has partly contributed to the decrease.
Scotland contributed £2.2 billion to the total fall in aGVA in the Distribution sector between 2011 and 2012, a fall of 19.0% for the region. Despite growth in aGVA between 2010 and 2011, the fall between 2011 and 2012 sees the region below the level in 2008, at the start of the recession. Wholesale (excluding Motor trades) (Division 46) contributed £1.7 billion to the decline in Scotland, a fall of 47.1% for the region, although the change without industry restructures and reclassifications would have been less pronounced.
The East of England contributed £1.6 billion to the total fall in aGVA in the Distribution sector between 2011 and 2012, a fall of 11.6% for the region. This decrease is a continuation of the decline in this sector, with aGVA in 2012 being well below its 2008 level. Wholesale (excluding Motor trades) (Division 46) contributed £1.0 billion to the region’s decline, a fall of 18.5%, with industry restructuring again playing a substantial part in the change.
Turnover in the Construction sector increased by 1.1% between 2011 and 2012, while purchases decreased by 0.3% over the same period. Together with changes in stocks and taxes, these have combined to increase aGVA by 2.6% (£1.8 billion) over the period. For further details on the components of aGVA see Calculation of Gross Value Added Estimates in background note 9.
Although this is the second consecutive year of aGVA growth for the sector following two years of decline, aGVA has yet to return to its 2008 level of £81.0 billion at the start of the recession.
The increase in aGVA was led by Construction of buildings (Division 41), contributing £1.9 billion to the overall aGVA growth in the sector, a 7.9% increase for the industry.
At the regional level, London, the South East, the East of England and the North West made the largest contributions to aGVA in the Construction sector in 2012 (see Figure 11).
Of the 12 regions, 7 saw increases in aGVA in the Construction sector between 2011 and 2012. The largest increases were in London (£0.8 billion) and the North East (£0.6 billion) (see Figure 12). In both of these regions growth was led by increases in Construction of buildings (Division 41).
The ABS covers only hunting, forestry, fishing and the support activities to agriculture. Commentary is therefore limited because the sector’s size in terms of economic output, as measured by the ABS, is small in comparison to the other sectors of the UK Non-Financial Business Economy. However, data for these parts of Section A can be found in the reference tables linked to this bulletin.
The other parts of agriculture, which include crop and animal production, are covered by the Department for Environment, Food and Rural Affairs (DEFRA).
Note that the values quoted here for Section A are in £ millions.
The part of Section A covered at ABS local level showed rises in turnover of 16.4% (£474 million) between 2011 and 2012 and purchases of 30.1% (£526 million). This led to a small decrease in aGVA of 0.6% (£7 million), with aGVA remaining lower than the level in 2008, at the start of the recession.
Validation of data returns for 2011 highlighted a small number of businesses within agriculture (Division 01) which needed to be reclassified resulting in revisions to the 2010 and 2011 figures. In line with the ABS revisions policy previous years (2008 and 2009) have not been revised and users should therefore take caution when comparing figures over time.
New title for this statistical bulletin - Since the publication of the previous Annual Business Survey, 2011 Regional Results in July 2013, this statistical bulletin has been renamed as 'UK Non-Financial Business Economy, 2012 Regional Results' to better reflect the content of the publication.
Removal of data for Insurance & reinsurance (Section K) - The new bulletin title also reflects the removal of data for Insurance & reinsurance (part of Section K) due to quality issues. This means that for the first time the UK totals in this regional release do not match the UK totals in the national release published in June 2012. See ABS coverage in background note 9 for further information.
Regional Standard Errors and Coefficients of Variation - For the first time Standard Errors and Coefficients of Variation for regional ABS data have been published. See background note 3 for further information.
ABS Glossary – An ABS glossary of terms has been developed and can be used to aid users’ understanding of the technical descriptions and abbreviations used throughout this bulletin. See background note 2 for further information.
Annual Business Survey – ABS
The Annual Business Survey (ABS), formerly the Annual Business Inquiry part 2 (ABI/2), produced by the Office for National Statistics (ONS), is the key resource for understanding the detailed structure, conduct and performance of businesses across the UK.
The ABS survey samples approximately 62,000 businesses in Great Britain from a population of over 1.8 million businesses in the sample frame on the Inter-Departmental Business Register (IDBR). The responding businesses provide information such as their turnover, purchases, employment costs, capital expenditure and stocks.
Approximately 11,000 businesses in Northern Ireland are sampled by the Department of Finance and Personnel Northern Ireland and contribute to the UK estimates.
In this National Statistics publication, a range of estimates are published including turnover, purchases, approximate Gross Value Added at basic prices (aGVA) and employment costs for industry sectors and the UK Business Economy. All data are reported at current prices (effect of price changes included).
Visit the ABS webpages for more in-depth information about the ABS, plus the latest news on survey changes and developments.
ABS Glossary of terms (345.4 Kb Pdf)
is available to help interpret the technical descriptions and abbreviations used throughout this bulletin.
ABS Quality Information
Quality and Methodology Information (QMI) (149.3 Kb Pdf)
report for the ABS can be found on the ONS website. The aims of the QMI report are to provide users with a greater understanding of ONS’s statistics, their uses and the methods that are used to produce them.
The ABS is a sample survey. As with all estimates obtained from sample surveys, ABS estimates are subject to various sources of error. The total error in a survey estimate is the difference between the estimate derived from the data collected and the true (unknown) value for the population. The total error consists of two main elements; the sampling error and the non-sampling error. The ABS was designed to minimise both these errors. The standard error is the estimated value of the sampling error. The estimate for a variable, plus and minus the standard error for the variable, gives a range in which the true unknown value for the population might lie. The closer the standard error is to 0, the more reliable the estimate.
The coefficient of variation is the standard error of a variable divided by the survey estimate, and it is used to compare the relative precision across surveys or variables. The closer the coefficient of variation is to 0, the more reliable the estimate. Standard errors and coefficients of variation for turnover, aGVA, purchases and employment costs are available in the quality measures table published with this release.
For the first time ABS is able to publish Standard Errors and Coefficients of Variation for the regional data (365 Kb Excel sheet) . Information about the methodology used in their calculation can be found in the Standard Errors for Regional Annual Business Survey Data (2.2 Mb Word document) report.
More detailed information on these and other quality and methodology issues is available in the ABS Technical Report published on the ABS webpages.
When ABS responses are received, checks are undertaken to ensure the information is correct. This is known as editing and validation. Selective editing was used to validate responses for the first time for the 2011 results using software called SELEKT. SELEKT is a generic selective editing tool which highlights responses which appear to be in error if they fall outside the range of what is expected and have a large influence on key estimates. Those responses with the highest score are prioritised for editing and validation. This increases the efficiency of the editing process by focusing on the responses with the highest impact and importance.
The introduction of selective editing should at least maintain, if not improve the quality of the ABS results as it should: minimise the bias introduced by processing (removing over-editing); remove non-value adding activities from the process; and focus resources to errors that impact on the results.
However, the full impact on quality is not yet known. This will continue to be monitored and any updates will be included with future ABS releases. For more information on SELEKT, see Chapter 5 of the
ABS Technical Report (1.68 Mb Pdf)
Uses and Users of ABS Statistics
ABS outputs may be used to answer questions such as:
how much wealth has been created in a particular industry?
has there been a shift in activity from one industrial sector to another, and which industry groups/classes/subclasses are driving the change?
are any industries particularly dominant in specific regions or countries of the UK and are there structural changes over time?
how productive is a particular industry, such as the chemicals sector, and what is its operating profitability?
There are a wide range of users that view, download and utilise the ABS data. Key users of the output include:
National Accounts: The statistics produced help to improve the overall quality of the UK National Accounts and the measurement of Gross Domestic Product (GDP). The ABS forms a major data input to the production of Input-Output Annual Supply and Use Tables used to set the annual level of UK GDP. The Supply and Use tables show the sales and purchases relationships between consumers and producers by industry (see section 2.1 of UK National Accounts).
Indices of Services and Production: Use ABS data to calculate the weights used to produce the indexes, and to calculate the deflation of turnover.
Eurostat: ABS is the main source of data supplied to Eurostat to meet the requirements of the European Structural Business Statistics (SBS) Regulation. This regulation ensures that key statistics on the structure of businesses are composed in a way which is comparable across Europe. Eurostat use SBS data to inform and monitor European Union policy.
Scottish Government and the Welsh Government: The financial information is also used by the Scottish Government and the Welsh Government in the compilation of regional and country specific Input-Output tables (For example Scottish Input-Output) and Indices of Production (For example Welsh Indices of Production). The resulting outputs are used to inform and monitor policy.
Department for Business, Innovation & Skills (BIS): Use ABS data to assess the structure and performance of UK industries.
Local Authorities: Data are used for economic research, planning purposes, lobbying and economic strategy development.
Business consultants: Use these data to understand trends in industry sectors and UK regions.
Marketing experts: Use these data to undertake demographic mapping and market segmentation.
Other local and national government departments and bodies, businesses, academics and the general public use these data for research, modelling or forecasting and to track industry trends.
Your Views Matter
We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: firstname.lastname@example.org or telephone Daniel Ayoubkhani on +44 (0)1633 456391.
The Changing Shape of Trade and Investment in the UK, an event coordinated jointly with the Department for Business, Innovation and Skills (BIS), took place in September 2013. The event featured a range of talks from users, producers and suppliers of business trade and investment statistics, not just from central government and the devolved administrations, but also local government, media, business representatives and researchers. To view the content of the day, please visit Storify.
International comparisons of structural business statistics are available from Eurostat (for the European Union), and the Organisation for Economic Co-operation and Development (OECD):
Eurostat: analysis of the European business economy.
OECD: follow the link to the structural analysis database, under the industry and services theme.
ABS estimates are revised in line with the ABS Revisions Policy. The revisions policy is available in the ABS Technical Report (1.68 Mb Pdf) to assist users with their understanding of the cycle and frequency of data revisions. Users of this release are strongly advised to read this policy before using the data for research or policy related purposes.
Planned revisions usually arise from either the receipt of additional data or the correction of errors to existing data by businesses responding to the ABS. Those of notable magnitude will be highlighted and explained.
Revisions to published ABS regional results for the previous reference year can be expected in the latest reference year’s data release.
As an example of the timing and scale of revisions, provisional regional data for 2011 were first published in July 2013 and included Insurance & reinsurance industries (part of Section K). The revised results for 2011 in this July 2014 release exclude Insurance & reinsurance industries. The revision to aGVA between these two regional releases, comparing the UK Business Economy to the UK Non-Financial Business Economy, is -6.2% (-£60.3 billion). If Insurance & reinsurance industries are removed from the July 2013 release, the revision to aGVA falls to -2.2% (-£20.7 billion).
Revisions to data provide one indication of the reliability of key indicators. A table (160 Kb Excel sheet) showing the size of revisions is published alongside the statistical bulletin released in July each year.
All other revisions will be regarded as unplanned and will be dealt with by non-standard releases. All revisions will be released in compliance with the same principles as other new information.
Response Rates and Compliance Costs
The figures in this release are based on an annual survey of businesses. Regional results for 2012 are based on a response rate of 77.8%. Response rates by different sectors can be found in the Quality Measures (934 Kb Excel sheet) accompanying the UK Non-Financial Business Economy, 2012 Revised Results, with a summary provided in Table 1.
|Standard Industrial Classification (Revised 2007) sector||Description||2010||2011||2012|
|A-S (Part)1||Agriculture, forestry and fishing, Production, Construction, Distribution and Non-Financial Service Industries||78.2||77.9||77.8|
|A (Part)1||Agriculture, forestry and fishing||76.3||76.4||80.2|
|H-S (Part)1||Non-Financial Service Industries||79.5||79.0||78.4|
The ABS covers only the UK Non-Financial Business Economy which accounts for approximately two thirds of the UK economy in terms of Gross Value Added.
The industries covered are:
Agriculture (support activities SIC 01.6 and hunting and trapping SIC 0.17 only), forestry and fishing - Section A.
Production industries - Sections B-E.
Construction industries - Section F.
Distribution industries - Section G.
Non-Financial Service industries - Sections H, I, J, L, M, N, P (private provision only), Q (private provision only in SIC 86.1 and 86.9), R and S.
For an estimate of the cost to GB businesses for providing their data to the ABS (known as compliance cost) see appendix B of the
ONS Compliance Plan.
(215.7 Kb Pdf)
These points should be noted when using ABS results:
The results in this Statistical Bulletin represent approximately two-thirds of the UK economy in terms of Gross Value Added. In previous releases the UK Business Economy has been referred to as the Whole Economy.
The industries covered are:
Agriculture (support activities SIC 01.6 and hunting & trapping 01.7 only), forestry and fishing - Section A;
Production industries - Sections B-E;
Construction industries - Section F;
Distribution industries - Section G;
Non-Financial Service industries - Sections H, I, J, L, M, N, P (private provision only), Q (private provision only in SIC 86.1 and 86.9), R and S.
The main industries excluded are:
Agriculture (SIC 01.1, 01.2, 01.3, 01.4 and 01.5 in Section A);
Financial and insurance (Section K);
Public administration and defence (Section O);
Education (public provision in Section P);
Health (SIC 86.2, public provision in SIC 86.1 and 86.9 in Section Q).
Data for a small part of the Financial and insurance sector (Insurance & reinsurance only (SIC 65.1 and 65.2)) has been collected by the ABS since 2008 and was previously included in the results. However, following discussions with key users, ONS decided to remove this experimental series from ABS releases for the reference year 2012 onwards due to the continued volatility of the data.
A review of the questionnaire for Insurance and Reinsurance businesses will be undertaken, alongside continued validation of returns to the survey, with the aim of reintroducing them to the ABS publications when the quality of the data has improved. Updates on progress will be available on the ABS News Pages.
Although the estimated total for the UK Business Economy in the regional ABS results is constrained to equal that in the corresponding national ABS results, the published totals for the UK Non-Financial Business Economy will not now be the same following the removal of data for the Insurance & reinsurance industries (Groups 65.1 and 65.2) from the regional results after apportionment has taken place (see note on Regional apportionment below). For example an enterprise contributing wholly to Insurance & reinsurance at a national level (and therefore removed from the national totals) may have local sites in other industries which will still contribute to the regional totals. Likewise, an enterprise contributing wholly to the Distribution sector (and therefore included in the national totals) may have a local site in Insurance & reinsurance whose contribution will be removed from the regional totals. The difference between the national and regional UK totals can be seen in Table 2.
Standard Industrial Classification
ABS results are classified according to the Standard Industrial Classification of Economic Activities (SIC) system. The UK is required by European legislation to have a system of classification consistent with the European Union’s industrial classification system. The system underwent a major review in 2007. ABS data have been collected and published on the SIC 2007 system since the reference year 2008. Other revisions to the system occurred in 1958, 1968, 1980, 1992, 1997, and 2003.
UK SIC 2007 is divided into 21 sections, each denoted by a single letter from A to U. Each section can be uniquely defined by the next breakdown, the divisions (denoted by two digits). The divisions are then broken down into groups (three digits), then into classes (four digits) and, in several cases, again into subclasses (five digits). So for example we have:
section C manufacturing (comprising divisions 10 to 33)
division 13 manufacture of textiles
group 13.9 manufacture of other textiles
class 13.93 manufacture of carpets and rugs
subclass 13.93/1 manufacture of woven or tufted carpets and rugs
The full structure of SIC 2007 consists of 21 sections, 88 divisions, 272 groups, 615 classes and 191 subclasses in SIC 2007.
Structural Changes to Businesses
The business economy is constantly evolving as businesses merge, are taken over, or simply change the main focus of their business. These changes can result in the industry classification of a business changing over time. For example, if a business undertakes both manufacturing and wholesale activities, but most of its employment is within manufacturing, it will be classified to manufacturing. If the employment were to change substantially so that the majority worked in wholesale then the industry classification would change and the whole of the businesses turnover, for example, would move from manufacturing to wholesale. In industries where movements are common, or where large businesses are involved, these changes can themselves sometimes cause large changes in ABS estimates. This should be taken in to consideration when changes over time are being assessed.
The business unit to which ABS questionnaires are sent is called the reporting unit. For ABS, the reporting unit represents an enterprise, which may consist of one or more sub-units (called local units). For example, an enterprise might be the head office for a group of shops. An enterprise may therefore have local units at different locations, and may carry out more than one type of economic activity.
To produce the regional estimates, the reporting unit data returned by each business is divided amongst its local units, largely in proportion to the employment in each local unit. Local unit employment is obtained from the Business Register Employment Survey (BRES), which collects data from local units. Results are then aggregated for each country / English region and industry, using the industry classification of the local units.
Each local unit is assigned a single SIC code, which corresponds to the unit’s principal activity. Where more than one type of economic activity is carried out by a local unit or enterprise, its principal activity is the activity in which most of the workforce is employed.
The resulting industry breakdowns at the UK level in the national release will not necessarily match those in the corresponding regional release. For example an enterprise contributing wholly to Production at the national level may have local units contributing to other sectors (e.g. Wholesale) at the regional level.
|Non-Financial Service Industries||Production Industries||Distribution Industries||Construction Industries||Agriculture, forestry and fishing||UK Non-Financial Business Economy|
Changes to the regional weighting methodology were introduced in 2012 and have been used for all estimates from 2009 onwards. Analysis of the impact of the new weighting method showed that differences in the figures were generally small, particularly at high levels of aggregation. Further information on the methodology of the approach and analysis of the impact can be found in Weighting in the Regional System.
As BRES is not carried out at the same time as ABS, differences in the timing of responses from ABS and BRES can lead to some reduction in the quality of the apportionment method.
Calculation of Gross Value Added Estimates
Approximate Gross Value Added at basic prices (aGVA) is derived from the responses of businesses to questions asked on the ABS. It is a measure of the income generated by businesses, industries or sectors, less the cost of goods and services used to create the income. The main component of income is turnover, while purchases is the main component of the consumed goods and services. Stock levels which may rise or fall can also have an impact on aGVA, as can the values of subsidies received or duty paid. Businesses' labour costs (for example, wages and salaries) are paid from the value of aGVA, leaving a gross operating surplus (or loss) which is a good approximation for profit (or loss). The cost of capital investment, financial charges and dividends to shareholders are met from the gross operating surplus.
aGVA is calculated in basic prices. That is, the valuation of output includes net taxes (taxes minus subsidies) on production, such as business rates, but not net taxes on individual products that result from the production process, such as Value Added Tax (VAT).
Estimates of turnover and purchases from the ABS are used to produce estimates of output and intermediate consumption (and therefore GVA) in the National Accounts. However, many other sources (including surveys and administrative sources) are also used to produce National Accounts estimates. These include sources of data on taxation and inventories (which are preferred to the ABS as they are used consistently throughout all parts of the National Accounts), as well as own-use output and non-market output (as these activities are only partially covered by the ABS).
There are differences between the two measures of gross value added in terms of coverage. For example, GVA covers the whole of the UK economy while aGVA covers the UK Non-Financial Business Economy, a subset of the whole economy that excludes large parts of agriculture, all of public administration and defence, publicly provided healthcare and education, and the financial sector.
There are conceptual differences between the two measures of gross value added. For example, some production activities such as illegal smuggling of goods must be included in the National Accounts but are outside the scope of the ABS.
There are three approaches to measuring GDP; one based on production activity, one based on expenditure, and one based on income. In theory, the three approaches should produce the same estimate of GDP. However, in practice this is never the case because the three approaches make use of different data sources, each with their own definitions and limitations. The three different estimates are therefore reconciled in a process known as Supply and Use balancing. The balancing process is informed by a variety of data sources, and results in adjustments to estimates of output and intermediate consumption. For many industries, the balancing adjustment is the greatest source of difference between estimates from the ABS and the National Accounts.
More detailed information of the differences between aGVA and GVA is available in the ABS Technical Report (1.68 Mb Pdf) published on the ABS webpages. There is also a more detailed article ‘ A Comparison between ABS and National Accounts Measures of Value Added’ (462.3 Kb Pdf) recently published by the ABS.
Department of Finance and Personnel Northern Ireland (DFPNI)
DFPNI publish their own estimates of activity in Northern Ireland which differ from those in this release due to variations in methodology. DFPNI estimates should be used where only Northern Ireland is of interest. Where comparisons with other UK regions/ countries are required, estimates in this release should be used.
Disclosure Control and Symbols Used
It is sometimes necessary to suppress figures for certain items in order to avoid disclosing information about an individual business. Further information on why data are suppressed is available in the ONS Disclosure Control Policy (173.1 Kb Pdf) or in the ABS Technical Report (1.68 Mb Pdf) .
The following symbols are used throughout the ABS releases:
* information suppressed to avoid disclosure.
.. not available.
- nil or less than half the level of rounding.
The United Kingdom Statistics Authority reviewed ABS outputs in their report “Assessment of compliance with the Code of Practice for Official Statistics: Statistics from the Annual Business Survey – Assessment Report 180”.
Following the ABS response to the report the UK Statistics Authority have since designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.
Designation can be broadly interpreted to mean that the statistics:
meet identified user needs;
are well explained and readily accessible;
are produced according to sound methods, and
are managed impartially and objectively in the public interest.
Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.
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ONS Theme Pages
Statistics are available on the ONS web pages categorised by themes, subject areas, topics and sub-topics. If you are interested in statistics on a particular issue, navigating through the categories will identify all the statistics available that relate to the selected theme, topic or sub-topic.
For Business themed short stories and articles please visit the Business and Energy theme page.
ONS has published commentary, analysis and policy on 'Special Events' which may affect statistical outputs. For full details visit the Special Events page on the ONS website.
ABS UK national results at the industry class level (4 digit Standard Industrial Classification 2007) are available free of charge via the 'Data in this release' button at the top of this publication, or from the ABS webpages on the ONS website. The published variables include turnover, purchases, aGVA and employment costs.
Additional standard extracts containing more detail are available on request. Bespoke analyses are also available but there will be a charge for these. For more information about either of these services please email email@example.com, or telephone +44 (0)1633 456592 for standard extracts, or +44 (0)1633 456601 for bespoke special analyses
Any bespoke analysis carried out for ABS customers will be available free of charge on the Published ad hoc data and analysis: Business and Energy web pages.
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: firstname.lastname@example.org
These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.
|Daniel Ayoubkhani||+44 (0)1633 456391||Business Outputs and Developments Divisionemail@example.com|