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Statistical bulletin: Business Investment, Q1 2013 Results This product is designated as National Statistics

Released: 27 June 2013 Download PDF


Errors have been found in the sector breakdowns of Gross Fixed Capital Formation (GFCF), published on 27 June 2013.  These have now been corrected.  This correction has no impact on the estimates of total GFCF and therefore no impact on Gross Domestic Product.

The following series have been corrected in the Business Investment Q1 2013 Results – By Sector and Asset:


These errors also affect GFCF sector breakdowns published in the Quarterly National Accounts (in Table F and K2; and quarterly net lending by sector in Table I will also be affected.)  In addition, the errors impact on Table A8 of the United Kingdom Economic Accounts.  Due to the integrated nature of the accounts, quarterly seasonally adjusted data for sector breakdowns of gross fixed capital formation (P.51), total gross capital formation (P.5) and subsequent aggregate series are also affected in the following United Kingdom Economic Accounts tables: A19, A22, A22C, A26, A31, A36, A41, X2 and X7.

These publications will be corrected when next published – 26 September 2013.

ONS apologises for any inconvenience this may cause. For further information please contact

Key points

  • This release adopts significant improvements to the estimation of gross fixed capital formation, leading to larger than usual revisions.
  • The estimates in this release are short term indicators of investment in assets, such as dwellings, transport equipment, machinery, buildings and intellectual property, across the United Kingdom. This release covers not only business investment, but asset breakdowns of total gross fixed capital formation (GFCF), of which business investment is one component.
  • All investment data referred to in this bulletin are seasonally adjusted chained volume measures.
  • GFCF was estimated to have increased by £79 million to £51.6 billion (0.2%) compared with the previous quarter. This is the first quarterly increase in GFCF since Quarter 1 2012.
  • The largest increase was in machinery and other equipment, which increased by £1.1 billion (12.0%) compared with the previous quarter.
  • Investment in private sector dwellings also rose in Quarter 1 2013 by £921 million (9.0%) compared with the previous quarter.
  • These increases were partially offset by a fall of £1.6 billion (16.6%) in investment in intangible assets, compared with the previous quarter.
  • Business investment was estimated to have decreased by £352 million to £29.2 billion (1.2%) when compared with the previous quarter.

Additional Information

This bulletin includes commentary on the dataset in addition to relevant graphs and tables. Accompanying background notes provide information on coverage, quality reporting, revisions and publication policy.

Detailed estimates of gross fixed capital formation by sector and asset, including business investment, at current prices and measured in chained volume terms for seasonally and non-seasonally adjusted estimates are available to download in the reference tables associated with this release.

Changes to the Business Investment release

We have recently undertaken a significant programme of work to improve our estimation of gross fixed capital formation (GFCF) and business investment, and most of that work has been successfully completed. We have not only implemented an improved methodology, but we will also be able to reinstate the asset by sector breakdown series in the UK National Accounts (Blue Book) 2013 which have been suspended in recent years. An article explaining the impact of these improvements will be published on 31 July 2013.  

ONS has been reviewing the Business Investment release and as a result, this release trials a new approach, and includes sector and asset breakdowns of GFCF not previously available in the release. We would welcome feedback on the inclusion of sector and asset breakdowns, and on how else the release might be improved, in either its content or presentation.


As referred to in the key points, in this release, a new production system using an improved methodology has been adopted from this release. The key improvements that have been implemented are:

improved construction of the asset, sector and industry series:

  • the higher level series are now constructed from the component asset, industry and sector series, rather than disaggregating the higher-level totals into lower-level series using historic proportions;

  • the estimates now  better reflect the volatility of capital investment at  asset, industry and sector levels;

  • the relative weights of the component asset, sector and industry series from which the aggregated series are constructed are improved;

improved deflation and chain linking methodology:

  • deflating and chain linking are carried out at a more detailed asset, sector and industry level than previously possible, which allows the most appropriate deflator to be used, optimising the trade-off between decreasing quality and increasing homogeneity at the more detailed level;

  • a full set of Producer Price Indices (PPI) deflators, appropriate for the more detailed and homogeneous  series, are used, rather than composite deflators for higher-level series;

  • the reinstated Business Spending on Capital Items Survey is now used, improving the weighting structure of the deflators in weighting the product-based deflators to the asset-based GFCF data;

  • carrying out deflation and chain linking on the acquisition and disposal series separately, rather than on net capital expenditure;

improved seasonal adjustment:

  • seasonal adjustment is carried out on the acquisition and disposal series separately, at the appropriate asset, industry and sector level, rather than on aggregated net capital expenditure series.  

  • constructing the series from the component asset, sector and industry series, rather than proportioning the total using historic proportions, has led to significant revisions to some of the lower-level series published in the Quarterly National Accounts Q1 2013, and this release. Chain linking and seasonal adjustment carried out on the lower-level acquisition and disposal series is also significantly different from, and better than, the approach used in recent years;

improvements to the data sources and methodology for the estimation of investment in artistic originals; and

inclusion of an operating surplus mark-up for own account software, in line with other European countries.

This improved methodology is in line with international guidance.

The larger than usual revisions to GFCF and business investment chained volume measures in this publication are therefore driven by the aggregation of lower-level series deflated by the appropriately-weighted deflators, and improvements to the relative weights of these components in the higher level series. The effect of these changes also has a significant impact on GFCF series by sector and asset. It should also be noted that in this publication, the reference year for chain linking is 2010, instead of 2009 in previous publications.

A full discussion of the methodological improvements and their impacts on estimates of GFCF can be found in the articles:

These developments are part of the programme of continuous improvement to the UK National Accounts.


Economic background

The current level of GFCF is at a similar level to that prior to 2003 using the seasonally-adjusted chained volume measure. Following the 2008 to 2009 economic downturn, annual levels of GFCF have remained fairly stable.

Total GFCF grew by 0.2% quarter-on-quarter in 2013 Quarter 1 but fell by 8.3% compared with the same quarter of 2012.

The year-on-year fall in total GFCF is the largest of any quarter since 2009 Quarter 4 when GFCF fell by 10.4% compared with 2008 Quarter 4. While this suggests that recent GFCF activity in the UK is falling, the longer-term pattern is one of a broadly flat trend since 2009.

Three of the five assets - dwellings, transport and other machinery & equipment - experienced positive quarterly growth during 2013 Quarter 1.

The level of business investment contracted over 2012, and was 5.5% lower in 2013 Quarter 1 compared with the same quarter of 2012. General Government GFCF also fell year-on-year in 2013 Quarter 1 by 11.3%. These falls were partially offset by year-on-year growth in public sector dwellings, which increased by 16.3%.

Economic sentiment in the UK started to improve towards the end of 2012 after being broadly flat earlier in the year and was stable in the first quarter of 2013 according to Eurostat. At the industry level, construction and services confidence were each on upward trends during the first quarter, although both remain negative. Consumer confidence was negative but stable over the same period, while sentiment in the retail sector deteriorated over the quarter and became slightly negative in March.

IMF observed improving global financial conditions over the six months to April 2013 in its latest Financial Stability Report. While there have been improvements in financial market confidence and the economic outlook is becoming more favourable, IMF concludes that continued improvements are required to prevent the re-emergence of financial risks. The Bank of England’s Credit Conditions Survey for 2013 Quarter 1 also pointed to improving financial conditions within the UK. The supply of credit to households and the corporate sector is reported to have increased in the first quarter. However, the demand for credit by households and businesses were broadly stable over the quarter, possibly indicating a degree of caution among borrowers that may be reflected in these GFCF data for 2013 Quarter 1.

Gross fixed capital formation

Figure 1: quarterly gross fixed capital formation chained volume measure

Reference year 2010=100, seasonally adjusted

£'s millions
Source: Quarterly Survey of Capital Expenditure - Office for National Statistics

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Figure 2: annual gross fixed capital formation chained volume measures

Reference year 2010=100, seasonally adjusted

£'s millions
Source: Quarterly Survey of Capital Expenditure - Office for National Statistics

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Business investment

Figure 3: quarterly business investment chained volume measures

Reference year 2010=100, seasonally adjusted

£'s millions
Source: Quarterly Survey of Capital Expenditure - Office for National Statistics

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Figure 4: annual business investment chained volume measure

Reference year 2010=100, seasonally adjusted

£'s millions
Source: Quarterly Survey of Capital Expenditure - Office for National Statistics

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Summary tables

Table 1: total gross fixed capital formation

£ million
  Percentage change
Most recent quarter on previous quarter   Most recent quarter on a year earlier Most recent level **
Total GFCF 0.2 -8.3 51,568

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In chained volume measures, total GFCF has been broadly flat in both annual and quarterly terms since 2009. It rose slightly, by £79 million (0.2%) in Quarter 1 2013 compared with the previous quarter.

Table 1a: total gross fixed capital formation by sector

£ million
  Percentage change Most recent level**
Most recent quarter on previous quarter Most recent quarter on a year earlier
GFCF 0.2 -8.3 51,568
Business investment -1.2 -5.5 29,192
Private sector dwellings 9.0 -14.8 11,111
Private sector transfer costs -10.9 -5.5 2,760
Public corporations dwellings 73.1 16.3 786
Public corporations transfer costs -13.7 -6.8 -82
General government -6.0 -11.3 7,801

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Business investment fell by £352 million (1.2%) to £29.2 billion in Quarter 1 2013, compared with the previous quarter. In Quarter 1 2013, private sector dwellings had the strongest growth since Quarter 2 2010, increasing by £921 million to £11.1 billion. Dwellings include both investment in new dwellings, and improvements to dwellings. General Government includes a small component of dwellings, so private and public corporations' dwellings do not sum to the asset total in Table 1b. 

Table 1b: total gross fixed capital formation by asset*

£ million
  Percentage change Most recent level**
Most recent quarter on previous quarter Most recent quarter on a year earlier
GFCF 0.2 -8.3 51,568
Dwellings 0.4 -16.3 10,986
Buildings includes transfer costs -1.5 -3.9 20,897
Transport equipment 217.4 -25.1 1,130
Other machinery and equipment, inc. cultivated assets 12.0 -6.9 10,671
Intangible fixed assets -16.6 -6.2 7,884

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The increased investment in private sector dwellings in Quarter 1 2013 led to an overall increase in total investment in dwellings for all sectors of £46 million in Quarter 1 2013 compared with the previous quarter (0.4%).

Investment in other machinery and equipment rose by £1.1 billion (12.0%) in Quarter 1 2013, the first rise in investment in these assets since Quarter 1 2012. Investment in transport equipment rose by £774 million in Quarter 1 2013, compared with the previous quarter, returning the level of investment to more normal levels.

Intangible assets now includes improved estimates of investment in artistic originals, which has contributed to an increase overall of around £2 billion in 2012 (in current prices), compared with previous publications. Although the overall level has increased, there was a fall of £1.6 billion in Quarter 1 2013 compared with the previous quarter (16.6%).

Background notes

  1. Gross National Inventory - Reservations

    Business investment is a component of gross capital formation (GCF). GCF estimates are subject to scrutiny from the European Statistical Commission as to their compliance, comparability and reliability in accordance with the harmonisation of gross national income regulation (council regulation 1287/2003).  Article 1 of the regulation states that GNI shall be defined in accordance with the European system of national and regional accounts (ESA95). Where member states are deemed not to be compliant with regulations 'reservations' are placed on the data involved.

    Business investment is subject to one reservation regarding the inclusion of estimates of cinematographic film originals in the business investment data. A brief guide to the GNI process and the reservations placed on UK GFCF estimates can be found on the ONS website. In this publication, improvements to the measurement of investment in cinematographic originals have been adopted. Following a review period, Eurostat will conclude whether the reservation can be lifted.

  2. Understanding the data

    Short guide to business investment

    Gross fixed capital formation is used in the compilation of the UK National Accounts’ expenditure measure of the second estimate of gross domestic product (GDP) and in the third estimate, the Quarterly National Accounts (QNA). It is an estimate of capital expenditure by both the public and private sectors. Examples of capital expenditure include spending on machinery and plant, transport equipment, software, dwellings and other buildings, and structures such as roads. Business investment statistics exclude expenditure on dwellings and the costs associated with the transfer of ownership of non-produced assets.

    Business investment estimates are a short term indicator of capital expenditure by manufacturing and non-manufacturing businesses within the UK, at current prices and constant prices both seasonally and non-seasonally adjusted. Business investment is one component of gross fixed capital formation.

    Interpreting the data 

    When making comparisons it is recommended that users focus on chained volume, seasonally adjusted estimates as these show underlying movements rather than seasonal movements, with the effect of changes in prices removed.

    In addition to the significant methodological improvements adopted in this release, GFCF and business investment estimates are subject to revision because of:

    • late responses to the Quarterly Capital Expenditure Inquiry

    • revisions to seasonally adjusted factors which are re-estimated every quarter

    • annual updating of the Inter-Departmental Business Register (IDBR) that forms the basis of the sampling and estimation for the Quarterly Capital Expenditure Inquiry. This occurs in quarter one and can have an impact on the Quarter 1 provisional results usually published in May.

    Definitions and explanations

    Definitions found within the main statistical bulletin are listed:

    Current price (CP)
    Current prices are the actual or estimated recorded monetary value over a defined period. They show the value for each item expressed in terms of the prices of that period.

    Chained volume measure (CVM)
    A chained volume measure is a series of economic data from successive years put in real terms by computing the production volume for each year in the prices of the preceding year. The data are then chain linked together to obtain a time-series of production figures from which the effects of price changes (that is, monetary inflation or deflation) have been removed. In other words, a series is obtained from the raw data which reflects only the production volume.

    Seasonally adjusted (SA)
    Seasonal adjustment aids interpretation by removing effects associated with the time of the year or the arrangement of the calendar, which could obscure movements of interest.

    Institutional sectors are defined in the System of National Accounts (SNA) glossary as:

    Units that are grouped together to form institutional sectors, on the basis of their principal functions, behaviour, and objectives.
    The resident institutional units that make up the total economy are grouped into five mutually exclusive sectors:

    • non-financial corporations

    • financial corporations

    • general government

    • non-profit institutions serving households

    • households

    In the case of non-financial and financial sectors these can be further broken down into the private sector, that is those units controlled by private individuals or groups, and the public sector, that is those units controlled by the state.

    The non-manufacturing industries are industries that do not produce products. The non-manufacturing industries in the bulletin include construction, distribution services, other services and other production. The other services industries are: hotels and restaurants; financial services; transportation and storage; information and communication; real estate; education; and health and social work. Other production industries include electricity, gas and water, agriculture, forestry and fisheries, and mining and quarrying industries. There is also a small industry entitled other services which includes non-manufacturing industries not included in the groups described above.

    Use of the data

    Business investment estimates are used by Office for National Statistics (ONS) in the compilation of the UK National Accounts, and externally by the Bank of England and Her Majesty’s Treasury to monitor economic performance and inform monetary and fiscal policy decisions. Business investment is also used by other government departments, such as the Department for Business Innovation and Skills, the business and research communities, education, the media and general public.

  3. Methods

    Details on the business investment methodology are published in the Quality and Methodology Information Report for Business Investment. This report describes the intended uses of the estimates presented in this publication, their general quality and the methods used to produce them.

    Composition of the data

    Business investment estimates are produced twice each quarter: an early provisional estimate in month 2, and revised results in month 3. They are based primarily on the results of the Quarterly Capital Expenditure Inquiry which collects data on the acquisition and disposal of capital assets in the private sector.

    Both public and private sector estimates cover acquisitions less disposals of vehicles and of other capital equipment together with expenditure on leased assets and new building work. Spending on land and existing buildings, including dwellings is excluded.

    The Quarterly Capital Expenditure Inquiry covers around 95% of the data used in the business investment estimates and is sourced from the manufacturing, other production, construction, distribution and other services sectors.

    More information about the Quarterly Capital Expenditure Inquiry can found on the Summary Quality Report for Quarterly Capital Expenditure Inquiry.

    The remaining data included in the business investment estimates are returned by public corporations.


    It is common for the value of a group of financial transactions to be measured in several time periods. The values measured will include both the change in the volume sold and the effect of the change of prices over that year. Deflation is the process whereby the effect of price change is removed from a set of values.

    The business investment results are aggregated and weighted and used to produce chained volume estimates in both seasonally adjusted and non-seasonally adjusted forms. The chained volume estimates (reference year 2010=100) are derived by taking the value (current price) estimates and adjusting to remove the impact of price changes using Producer Price Indices.

  4. Quality

    Estimates for the Business Investment Statistical Bulletin are based on the financial data collected through the Quarterly Capital Expenditure Inquiry at month two of each quarter (provisional) and month three (revised). Response rates for the current quarter reflect the response rates at the time of publication. Late returns for the previous quarter’s data are included in the month three (revised) results.  Response rates for historical periods are updated to reflect the current level of response at the time of this publication.

    Table 2: Response rates

    At month two (Provisional)   At month three (Revised)
    Period Overall response rates (per cent) Questionnaires   Period Overall response rates (per cent) Questionnaires
    2011 Q4 76.7   2011 Q4 91.3
    2012 Q1 75.7   2012 Q1 91.5
      Q2 74.2     Q2 91.2
      Q3 79.0     Q3 90.7
      Q4 76.8     Q4 90.6
    2013 Q1 77.8   2013 Q1 86.1

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    National Accounts revisions policy

    In adherence with National Accounts revision policy the business investment estimates are revised for specific periods during certain quarters.

    Revision triangles

    The reliability of key indicators can be estimated by monitoring the size of revisions. However, the methodology used to produce GFCF and its component series has significantly changed since the last publication. A more useful comparison of estimates produced using two very different methodologies is an impact analysis. Hence, the revisions tables are not published in this release, and instead, an impact analysis has been published in the articles listed in Section 5. Revisions triangles will be re-instated when both provisional and revised estimates have been produced using the new methodology.

  5. Further information on methodology

    Information on the improvements to the estimation of gross fixed capital formation (including business investment) can be found in:

    Further information about the UK National Accounts and the programme of continuous improvement can be found at:

    British Nuclear Fuels plc (BNFL)

    In April 2005 nuclear reactors were transferred from British Nuclear Fuels plc (BNFL) to the Nuclear Decommissioning Authority (NDA). BNFL is classified as a public corporation in National Accounts and the NDA as a central government body. The capital formation estimates in this release reflect this transfer from the public corporations manufacturing category. The value of the transfer was -£15.6 billion. The negative value reflects the fact that the reactors are at the end of their productive lives and have large decommissioning and clean-up liabilities. This shows up as a prominent trough in Quarter 2 2005 in the general government series, and a complementary peak in Quarter 2 of the business investment series, which includes investment by public corporations (except dwellings and transfer costs). A more detailed explanation about the transfer can be found in the December 2006 Business Investment release.

    Aircraft imports

    On 1 January 2011 a change was made to the zero-rating of VAT on qualifying aircraft. More information on this can be found on the HMRC website. This may have contributed to the high level of aircraft imports for Quarter 4 2010 and the low level of aircraft imports for Quarter 1 2011.

  6. Other relevant sources of data

    International business investment comparisons are not available on a like for like basis as the compilation of European statistics on business investment differs from the data provided within this release. However European estimates of business investment provided by Eurostat, the European statistical office can be found on the Eurostat website.

    Business investment in the United Kingdom accounts for just over half of total gross fixed capital formation. Total gross fixed capital formation forms around 15% of gross domestic product.

    The GSS Business Statistics – interactive user guide is an interactive tool to help you find what business and economic statistics are available, and choose the right data for your needs.
    ONS publishes the following statistical releases, which provide complementary information on UK business and economic performance:

  7. Feedback

    ONS welcomes your feedback on the business investment release and data. Further enquiries about business investment can be addressed to the business investment team at, or, to engage in discussion about business investment, and to share information with other users or producers of financial and economic statistics, visit the Financial and Economic Statistics User Group on the Royal Statistical Society’s StatsUserNet discussion forum.

  8. Publication policy

    Details of the policy governing the release of new data are available from the Statistics Authority or from the Media Relations Office email: A list of the names of those given pre-publication access to the contents of this bulletin is also available.

  9.  Accessing data

    The business investment statistical bulletin and time series datasets are available to download free from the ONS website at 9.30 am on the day of publication.

    The business investment statistical bulletin conforms to the standards set out in the National Statistics Code of Practice.

    Time series used in this bulletin and time series datasets carry unique identifiers for ease of use. More information on these identifiers is available in the article published on 25 August 2011, 'New series identifiers for GDP(O), IoS and IoP and GCF'.

  10. Details of the policy governing the release of new data are available by visiting or from the Media Relations Office email:

Statistical contacts

Name Phone Department Email
Louisa Nolan +44 (0)1633 455250 Office for National Statistics
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