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, 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 table associated with this release.
To allow sufficient time to prepare for the major changes in Blue Book 2014, only the output-based estimate of GDP will be published on 15 August 2014. Business Investment Q2 2014, and the other income and expenditure components of GDP, will not be published until 30 September 2014. This is in accordance with the policy for Quarterly National Accounts Q2 2014.
Revised figures for the estimation of GFCF and business investment (Q1 1997 to Q2 2014) will be published in the Business Investment Q2 2014 release in September, when the UK National Accounts, consistent with Blue Book 2014, are also published.
In that publication, changes to the estimation of GFCF and its components, including business investment, will be introduced to meet the UK’s legal requirements for compliance with the European System of National Accounts 2010 (ESA10). Other changes will also be introduced to meet users’ needs.
The key changes include:
the capitalisation of research and development (R&D), which will for the first time be recorded as GFCF instead of intermediate consumption (ESA10);
the inclusion of military weapons systems in GFCF (ESA10);
improvements to the conversion of industry-level series from Standard Industrial Classification 2003 (SIC2003) to SIC 2007 for the key survey data input for GFCF;
changes to the allocation of supply and use balancing adjustments;
improvements to the treatment of the cost of decommissioning production plants such as nuclear power plants (ESA10);
improvements to the estimation of own account construction, and the inclusion of a mark-up for net operating surplus on this
the inclusion of small tools used in production within the GFCF definition (ESA10).
Articles describing the methodological changes and the impact of those changes of GFCF and GDP in more detail are being published on the ONS website:
On 30 June the following article will be published:
Changes to National Accounts: gross fixed capital formation and business investment – impact of ESA10 changes on volume measures - pub 30 June 2014.
In 2013, ONS implemented significant methodological improvements to the estimation of GFCF. A description of these improvements and their impacts on estimates of GFCF can be found in the following articles:
These developments are part of the programme of continuous improvement to the UK National Accounts.
In accordance with National Accounts revisions policy, the business investment estimates are revised for specific periods during certain quarters.
This release presents revised estimates of GFCF and its asset and sector breakdowns from 2013 Q1.
GFCF estimates are subject to revision because:
a higher response rate from surveys, such as the Quarterly Survey of Capital Expenditure, is achieved, which improves the quality of the later estimates;
forecast data are replaced with actual data, for example in the general government estimates
seasonal adjustment factors are re-estimated every quarter. Seasonal adjustment factors may be revised due to the addition of the latest quarter’s estimate, and because of revisions to the unadjusted data.
In this release, revisions are largely due to revisions to the Quarterly Capital Expenditure Survey, the key data source for estimates of GFCF and business investment. This is in line with the trend that large capital expenditure tends to be reported later in the data collection period. This means that large expenditures are often not reported in time for the provisional (month two) results, leading to a tendency of upward revisions in the later estimates for business investment and GFCF.
The quarter on quarter growth rate of GFCF has been revised upwards by 1.8 percentage points to 2.4%. All but one asset has seen an upward revision in growth rates, the largest being intangible fixed assets with a 6 percentage point increase. The only decrease is other machinery and equipment seeing a -0.7 percentage point decrease.
There has also been an upward revision of 2.5 percentage points (to -7.8% quarter on quarter growth) in general government; this is because of more data being available to government accounts.
Revision tables can be found as a reference table in the data section of this publication.
A table of the provisional (month two) and revised (month three) response rates for the Quarterly Capital Expenditure Survey is presented below.
|At month two (Provisional)||At month three (Revised)|
|Period||Overall response rates (per cent) Questionnaires||Period||Overall response rates (per cent) Questionnaires|
In Q1 2014 business investment grew by £1.6 billion (5.0%). This makes five consecutive periods of growth, the first time this has occurred since 1998. On an asset basis, all components of GFCF grew in Q1 2014 with the strongest growth in intangible fixed assets which grew by 8.3% (£0.7 billion). Compared with the same quarter a year ago, GFCF grew by £5 billion (9.7%) in Q1 2014.
The Bank of England’s Agents’ Summary for March 2014 cited rising investment intentions resulting from a general improvement in business confidence and wider economic conditions. January’s Agents’ summary cited reasons for investing as a desire to increase efficiency; long-delayed replacement of equipment and modest increases to capacity. The Bank’s Credit Conditions Survey for Q1 2014 also reported increases in both the availability and demand for credit across a range of firm sizes.
Total GFCF rose by an estimated £1.3 billion (2.4%) in Q1 2014 compared with the previous quarter and saw a quarter on the same quarter a year ago growth rate of 9.7%. This was the largest quarter on the same quarter a year ago growth since Q3 2007. Business investment rose by an estimated £1.6 billion (5.0%) in Q1 2014 compared with the previous quarter. Intangible fixed assets saw its largest quarter on previous quarter growth (8.3%) since Q2 2011, with spending on software increasing.
|Most recent quarter on previous quarter||Most recent quarter on a year earlier||Most recent level **|
|Private sector dwellings||2.7||13.2||12,716|
|Private sector transfer costs||-0.3||8.4||3,060|
|Public corporations dwellings||-1.9||3.8||706|
|Public corporations transfer costs||-27.9||-31.2||-75|
|** Series may not sum to totals due to rounding.|
|Percentage change||£ million|
|Most recent quarter on previous quarter||Most recent quarter on a year earlier||Most recent level **|
|Other new buildings and structures||0.3||11.1||21,689|
|Other machinery and equipment, inc. cultivated assets||1.8||0.5||10,836|
|Intangible fixed assets||8.3||6.4||8,878|
|** Series may not sum to totals due to rounding.|
Additional analyses available to download
ONS also publishes additional analyses of GFCF, business investment, and the Quarterly Survey of Capital Expenditure, which have been created in response to ad hoc user requests. This is available to download free from the ONS website. Below is a list of the most recent ad hoc requests, together with a link to the web pages from which they can be downloaded. Enquiries about ad hoc requests may be made to email@example.com.
A time series of investment in computer hardware by the private sector broken down by industry; current price not seasonally adjusted.
Gross Fixed Capital Formation 2014 Q1 data for total Business Investment and General Government, excluding British Nuclear Fuels (BNFL) in 2005 Q2.The series are provided in current price and chained volume measures, not seasonally adjusted and seasonally adjusted format.
A time series of estimates from the Quarterly Survey of Capital Expenditure,broken down by industry, asset and acquisitions/disposals; current price not seasonally adjusted.
A time series – commencing Q1 2012 – of estimates from the Quarterly Survey of Capital Expenditure broken down by employment size bands. Manufacturing and non-manufacturing, current price not seasonally adjusted estimates are available. A breakdown of survey populations by employment size bands is also included.
Gross Fixed Capital Formation 2014 Q1 data for total GFCF industry split for purchased software, own-account software, mineral exploration and artistic originals. This series is provided in current price, not seasonally adjusted.
Gross Fixed Capital formation 2014 Q1 data for private sector new dwellings and private sector new dwellings and private sector improvements to dwellings. Both series are provided in current price seasonally adjusted format and in chained volume measure seasonally adjusted format.
Gross Fixed Capital Formation 2013 Q4 data for new dwellings (excluding land) and costs associated with the transfer of non-produced assets for the Households and Non-profit Institutions Serving Households sector. The series is in current price not seasonally adjusted format.
Business Investment and Gross Fixed Capital Formation as a proportion of Gross Domestic Product
Quarterly estimates from the Quarterly Survey of Capital Expenditure: net expenditure (gross fixed capital formation), current prices, not seasonally adjusted. These estimates are the key data source for the Q4 2013 revised Business Investment release published on Friday 28th March 2014.
These estimates are experimental industry and asset breakdowns of business investment, which covers investment in plant and other machinery, transport equipment, intangible assets and buildings and other structures, by the private sector and public corporations. We requested feedback from users on the GFCF industry breakdowns published as an ad hoc dataset in August 2013. We have acted on the feedback we received to: i) improve our pro rata approach, using a methodology more suitable for series which may contain both positive and negative values; and ii) to improve how assets are assigned to industries. This has significantly improved the series presented here over the GFCF breakdowns, however, these estimates still remain experimental. More information on the methods and caveats can be found in the README section of the dataset.
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 two reservations regarding the improvement of estimates of cinematographic originals and the inclusion of a mark up for own-account software. A brief guide to the GNI process and the reservations placed on the UK GCF estimates can be found on the ONS website. Both these issues have now been addressed. Eurostat are reviewing whether the reservation can be lifted.
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) at month two and the quarterly national accounts (QNA) at month three. It is an estimate of net capital expenditure by both the public and private sectors. Examples of capital expenditure include spending on machinery and plant, transport equipment, software, new dwellings and other buildings, and major improvements to existing buildings, and structures such as roads.
Business investment estimates are a short term indicator of net capital expenditure by 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. Business investment estimates exclude expenditure on dwellings and the costs associated with the transfer of ownership of non-produced assets, and capital expenditure by local and central government.
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.
Definitions and explanations
Definitions found within the main statistical bulletin are listed here.
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 institutional units of the UK 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
In the case of non-financial and financial sectors these can be further broken down into the private sector, i.e. those units controlled by private individuals or groups, and the public corporations, i.e. those units controlled by the state.
Use of the data
Business investment estimates are used by the 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 the general public.
Details of the business investment methodology are published in the Quality and Methodology Information (128.9 Kb Pdf) . 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
Estimates of gross fixed capital formation and business investment are produced twice each quarter: an early provisional estimate in month two and revised results in month three. The largest component of the estimates is collected via the Quarterly Survey of Capital Expenditure. This survey collects data on the acquisition and disposal of capital assets from the manufacturing, other production, construction, distribution and other services sectors. Other key sources for gross fixed capital formation include data returned by local and central government and public corporations, data on construction, and data on new dwellings and artistic originals. Gross fixed capital formation by local and central government, investment in new dwellings and the costs associated with the transfer of non-produced assets (primarily costs associated with the transfer of land and existing buildings) are excluded from the business investment estimates, but included in total gross fixed capital formation. The acquisition and disposal of land and existing buildings, including dwellings, is excluded from both the business investment and gross fixed capital formation estimates.
More information about the Quarterly Survey of Capital Expenditure can be found in the ‘Summary Quality Report for Quarterly Capital Expenditure Inquiry’ (287.8 Kb Pdf) .
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 estimates 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 (968.6 Kb Pdf)
using product based deflators.
Further information on methodology
Further information about the UK National Accounts and the programme of continuous improvement can be found at:
National Accounts methodology and articles Continuous Improvement of Gross Domestic Product: Sources, Methods and Communication
British Nuclear Fuels Ltd (BNFL)
In April 2005 nuclear reactors were transferred from British Nuclear Fuels Ltd (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 Q2 2005 in the general government series, and a complementary peak in Q2 2005 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 (414.3 Kb Pdf) .
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 Q4 2010 and the low level of aircraft imports for Q1 2011.
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 14% of gross domestic product as seen in table 1 the United Kingdom National Accounts 2013.
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:
Profitability of UK Companies - quarterly data on capital employed by Private Non-Financial Corporation’s (PNFCs). Contains annual, net and gross rates of return (expressed as percentages) on capital used by PNFCs
Quarterly National Accounts - includes UK data on gross fixed capital formation and changes in inventories
UK Economic Accounts - quarterly detailed estimates of national product, income and expenditure, UK sector accounts and UK balance of payments, including data on gross fixed capital formation
UK National Accounts - the Blue Book - annual publication of the UK National Accounts, including data on gross fixed capital formation
Retail Sales - monthly estimate of UK retail sales
UK Manufacturers' Sales by Product (PRODCOM) - annual output by manufacturers
Labour Market Statistics - monthly data on employment, unemployment, economic inactivity, claimant count, average earnings, labour productivity, vacancies and labour disputes
Business Demography – annual statistics on UK business births, deaths and survival
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 firstname.lastname@example.org, 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.
Details of the policy governing the release of new data are available from the Statistics Authority or from the Media Relations Office email: email@example.com. A list of the names of those given pre-publication access to the contents of this bulletin is also available.
The business investment statistical bulletin conforms to the standards set out in the UK Statistics Authority 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' (35.4 Kb Pdf)
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Next publication: Tuesday 30 September 2014.
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|Louisa Nolan||+44 (0)1633 455250||Office for National Statisticsemail@example.com|