In September 2014, the Office for National Statistics (ONS) will publish revised figures for the UK national accounts, including gross domestic product (GDP) and balance of payments, consistent with Blue Book 2014. These revisions will reflect significant changes to the international standards adopted by all European Union (EU) Member States as well as other improvements designed to ensure that the UK National Accounts continue to provide a reliable framework for analysing the UK economy and comparing it with other countries.
This note summarises the changes and updates the earlier Content of Blue Book and Pink Book 2014 article, published on 26 November 2013.
The main categories of changes to be implemented in Blue Book 2014 are:
Ones required under International standards and guidelines
- European System of Accounts (ESA)
- Balance of Payments Manual (BPM)
- The new Manual on Government Deficit and Debt (MGDD)
Ones from ensuring comparability in measuring Gross National Income (GNI) across EU countries
Other changes to meet user needs, including
- Implementing the Review of public sector finances (PSF) and alignment of national accounts with PSF
- Improved methods for inventories and gross fixed capital formation (GFCF)
- Updating base year and reference year from 2010 to 2011
- Prices re-basing from 2005 to 2010
Changes stemming from the new international standards
The UK national accounts comply with international standards set out in ESA, BPM and MGDD. These standards ensure that economic statistics produced by all EU Member States are compiled in a consistent, comparable, and reliable way.
Periodically, these manuals are reviewed to ensure that they continue to reflect economic and technological developments in domestic and global economies and meet user needs.
The new ESA 2010 introduces a number of new concepts, for example, the extension of assets to cover research and development expenditure and weapon systems. EU Member States will also be required to produce data on the treatment of pension entitlements, these are now recognised as liabilities.
The new BPM6 includes new measurement methods for foreign direct investment, gambling, and for when businesses, as part of their production regime, send goods abroad for processing.
The revised standards will change the way in which national accounts and balance of payments across all EU Member States are produced and bring them in line with the worldwide System of National Accounts 2008 (SNA2008), already adopted by other parts of the world, including Canada, the United States and Australia.
A summary of the main changes are included in changes stemming from the new International Standards.
Changes related to improved comparability of Gross National Income
GNI is an important statistic within the national accounts. It is used in the calculation of a Member State’s contribution to the EU budget. Because of this operational importance, the EU statistical office (Eurostat) carries out regular audits of the methods and data used to estimate GNI. In 2012, following a comprehensive audit of the methods used across EU countries, a number of issues were identified which Member States have to address by 2014. Blue Book 2014 will include improvements to methods and data to address these issues in respect of the UK.
One of these relates to consistency across the EU Member States in the measurement of illegal activities. In the case of the UK, this means that activities such as drugs dealing and prostitution will henceforward be included within the national accounts, further details on this and the other changes under this category are set out in changes stemming from improved comparability of Gross National Income measurement.
Changes from improved methodologies
A number of other improvements will be implemented, where these are a priority to ensure the national accounts give an accurate picture of the economy.
Some of these stem from the Review of PSF Statistics. Others are the result of the regular reviews of methods and sources that ONS conducts to ensure that they continue to provide a reliable description of the economy.
Further improvements will be made where these are a priority to meet user needs. These include improvements to the methods used to produce estimates of GFCF and inventories.
Blue Book 2014 will also include the five-yearly rebasing of producer price indices and services producer price indices to 2010=100, and the usual annual updating of the base year and reference year for chained volume estimates from 2010 to 2011.
Further details on this category of changes are set out in changes from prioritised list of improved methodologies.
Impact on national accounts statistics
These changes will have impacts on a number of key economic aggregates, including:
Current price GDP and GNI levels and growth rates
Real GDP levels and growth rates
Trade, imports and exports
Other key Balance of Payments aggregates
Investment, including business investment
Household Saving Ratio
Public Sector Finance Statistics
There will also be implications for a number of national accounts and balance of payments publications, with changes to table layouts, the addition of new time series and removal of others, and changes to some series identifiers. Users will be notified of these changes in advance of publication.
When will the changes be introduced?
The changes will be introduced in September 2014, in the quarterly national accounts consistent with the subsequent Blue and Pink Books. Revised national accounts for all EU Member States will be transmitted to Eurostat simultaneously.
Further information about the impact of the changes
The objective is to give users maximum information about the methods used and the likely scale of the impact at the earliest opportunity. The present paper provides an overarching account of the changes that are being made. In parallel with the ongoing production work to compile this year’s Blue and Pink Books, ONS will publish a series of articles setting out further methodological details, topic by topic, and an indication of the impact of these changes. Users will therefore have this information well before publication of the accounts themselves, at the end of September.
Previous articles and dates for upcoming infomation can be found in our changes to National Accounts section.
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