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Statistical bulletin: Quarterly National Accounts, Q4 2012 This product is designated as National Statistics

Released: 27 March 2013 Download PDF

Correction

25 April 2013

The post production quality assurance process of the 2012 Q4 M3 Quarterly National Accounts has identified an error in the income component 'Compensation of Employees' originally published on 27 March 2013. This affects the published levels of Compensation of Employees both annually and quarterly for 2011 and 2012. No other series are affected and there is no impact on growth rates or the aggregate GDP figures.

ONS has today reissued table D 'Gross domestic product: by category of income' within the Quarterly National Accounts statistical bulletin and corrected the Quarterly National Accounts Q4 2012 time series dataset for DTWM Compensation of Employees.

ONS apologises for any inconvenience caused.  For further information please contact GDP@ons.gsi.gov.uk

Key findings

  • UK gross domestic product (GDP) in volume terms was estimated to have decreased by 0.3% between the third and fourth quarter of 2012, unrevised from the previous publication. In current prices GDP was also estimated to have decreased by 0.3% for the same period.
  • Household final consumption expenditure increased by 0.4% in volume terms in the latest quarter revised up from the 0.2% increase previously estimated.
  • Among the main contributors to the decrease in GDP in the latest quarter were gross fixed capital formation which fell by 0.2% in volume terms and the £6.0 billion net trade deficit, which follows a £5.3 billion net trade deficit in the previous quarter.
  • GDP in volume terms increased by 0.2% when comparing the fourth quarter of 2012 with the fourth quarter of 2011. Between the years 2011 and 2012, GDP in volume terms increased by 0.3%. Figure 1 shows the annual growth in an historical context.
  • The households’ saving ratio was estimated to be 7.1% in 2012, the highest since the 1997 estimate of 8.1%.
  • Real household disposable income increased by 2.1% between 2011 and 2012. This is the highest growth since 2003 when it rose by 2.7%.
  • The largest contributions to the increases in the households’ saving ratio and real household disposable income were an estimated £20.1 billion increase in wages and salaries in 2012 compared with 2011.

What is GDP ?

GDP is an estimate of total economic activity in the UK. It is constructed by balancing the estimates from the output, income and expenditure approaches to measuring GDP which in theory are all equal. For more information on how GDP is balanced see 'Balancing GDP' in the background notes section of this release.

Data in this release, unless otherwise stated, will have been seasonally adjusted with seasonal effects removed to allow comparisons over time. Estimates are given in chained volume measures (CVM), sometimes known as real terms, with the effects of inflation removed or current prices (CP), sometimes known as nominal terms, without any adjustment for inflation.

Growth for GDP and its components is given between different periods. Latest year on previous year gives the annual growth between one calendar year and the previous. Latest quarter on previous quarter growth gives growth between one quarter and the quarter immediately before it. Latest quarter on corresponding quarter of previous year shows the growth between one quarter and the same quarter a year ago.

This bulletin contains information on the third estimate of GDP for the fourth quarter of 2012. It includes revisions to and more detail on the output, expenditure and income approaches to GDP. Also included are data on the institutional sector accounts, including the households’ saving ratio and real household disposable income. In line with national accounts revisions policy, the earliest period open for revision in this estimate is 2011 quarter one.

Key data

Table 1: Q4 2012

     Gross domestic product
  Households' saving ratio Real households' disposable income Current market prices Chained volume measure Chained volume measure
% %1 2009=100 2009=100 %1
         
Seasonally 
adjusted
2011 Q1 5.2 -1.5 107.0 102.5 0.5
2011 Q2 6.8 1.1 107.1 102.6 0.1
2011 Q3 6.6 0.0 109.2 103.2 0.6
2011 Q4 7.4 0.4 109.2 103.0 -0.1
2012 Q1 6.5 -0.9 108.8 103.0 -0.1
2012 Q2 7.5 3.1 109.0 102.6 -0.4
2012 Q3 7.9 0.2 111.2 103.6 0.9
2012 Q4 6.7 -0.1 110.8 103.2 -0.3

Table source: Office for National Statistics

Table notes:

  1. Percentage change on previous quarter.

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Headline GDP decreased by 0.3% in the fourth quarter of 2012, unrevised from the second estimate. The economic picture for the quarter remains broadly unchanged. There was a 'fall-back' effect from the Olympic and Paralympic Games along with the reduced North Sea oil output and weak underlying domestic demand. However, the long term picture remained broadly flat. 

Historical context

Figure 1: Annual GDP, table A2, CVM SA

Presents annual GDP, table A2, CVM SA
Source: Office for National Statistics

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Figure 1 shows how the level of the chained volume measure of GDP has changed between 1948 (when annual records began) and 2012. From these data, it can be seen that the economy in 2012 was more than five times larger than in 1948. When compared with 2002, GDP in 2012 had grown by 14.5%.

Figure 2 shows growths for the chained volume measure of GDP between 1948 and 2012.

Figure 2: Annual GDP growth, CVM SA

Presents annual GDP growth, CVM SA
Source: Office for National Statistics

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GDP analysed by output categories, chained volume measures, tables B1 and B2

Annex A (45 Kb Excel sheet) contains growth rates back to Q1 2011.

Figure 3: Output indices, CVM SA

Presents output indices, CVM SA
Source: Office for National Statistics

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Output of the agriculture, forestry & fishing industries fell by 0.5% in the fourth quarter of 2012 following an increase of 4.8% in the third quarter of 2012.

Output of the production industries fell by 2.1% in the fourth quarter of 2012. In the third quarter of 2012 output of the production industries rose by 0.5%. In the year 2012, production industries output fell by 2.4%.

Mining & quarrying output decreased by 10.7% in the fourth quarter of 2012 following an increase of 2.0% in the previous quarter.

North Sea oil rig maintenance has had a clear impact within the ‘mining and quarrying including oil and gas extraction’ category of output. Although revised up by 0.3 percentage points from the previously published estimate, a fall of 10.7% clearly shows the impact of this maintenance. Consequently, comparing the gross value added figures both including and excluding oil and gas, there is a 0.2 percentage point difference, with GVA (including oil and gas) contracting by 0.3% and GVA excluding oil and gas falling by 0.1%.

Manufacturing output fell by 1.4% in the fourth quarter of 2012. In 2012 quarter three, manufacturing output rose by 0.6% (see Figure 4).

Figure 4: Manufacturing growth, quarter on quarter, CVM SA

Presents manufacturing growth, quarter on quarter, CVM SA
Source: Office for National Statistics

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Electricity, gas, steam & air conditioning supply increased by 2.2% in the fourth quarter of 2012 following a decrease of 2.5% in the third quarter.

Water supply, sewerage & waste management decreased by 1.2% in the fourth quarter of 2012 following an increase of 1.9% in the third quarter of 2012.

A more positive development is the growth of 0.8% in the construction industry for the fourth quarter of 2012 following a decrease of 1.8% in the third quarter. Despite the downward revision of 0.1 percentage points from the second estimate, it was ultimately a return to growth for the first time in six quarters. For the year 2012, construction output fell by 8.1%.

Services which grew by 1.2% in the third quarter of 2012, the highest rate for five years, saw no growth in the fourth quarter (see Figure 5). Though it is not possible to quantify the effect of the Olympics, its effects might be apparent within some sections of the service industries. There was a decline of 5.5% for the fourth quarter in ‘other services’ – the industry which contained Olympic & Paralympic ticket sales in the previous quarter. The Olympic ticket sales are estimated to have contributed 0.2% to GDP in the third quarter. Furthermore, accommodation & food services declined by 2.8% in the fourth quarter, following relatively robust growth in the previous two quarters, linked to the Diamond Jubilee in quarter two and the Olympics in quarter three. For the year 2012, services output increased by 1.2%.

Figure 5: Services growth, quarter on quarter, CVM SA

Presents services growth, quarter on quarter, CVM SA
Source: Office for National Statistics

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Output of the distribution, hotels & restaurants industries decreased by 0.6% in the fourth quarter of 2012 following an increase of 1.8% in the third quarter. The decrease in 2012 quarter four was mainly due to food & beverage service activities and accommodation.

Output of the transport, storage & communication industries rose by 0.9% in 2012 quarter four. The increase was mainly due to motion picture, video & TV programming production, sound recording & music publishing activities and programming & broadcasting activities. In the third quarter of 2012 transport, storage & communication industries output was unchanged. 

Output of the business services & finance industries rose by 0.5% in the fourth quarter of 2012. In the third quarter of 2012 output of the business services & finance industries rose by 0.9%. The increase in the fourth quarter was mainly due to employment activities and legal & accounting activities.

Output of government & other services decreased by 0.9% in the fourth quarter of 2012 following an increase of 1.6% in the third quarter. The decrease in the fourth quarter was mainly due to sports activities, amusement & recreation activities which fell following the inclusion of Olympic and Paralympic Games ticket sales in quarter three.

Gross value added excluding oil and gas extraction fell by 0.1% in the fourth quarter of 2012 following an increase of 0.9% in the third quarter.

GDP analysed by expenditure categories, chained volume measures, table C2

Annex B (38.5 Kb Excel sheet) contains growth rates back to Q1 2011.

Gross domestic expenditure (the sum of all expenditure by UK residents on goods and services which are not used up or transformed in a productive process) fell by 0.1% in the fourth quarter of 2012 following an increase of 0.5% in 2012 quarter three.

Household final consumption expenditure increased by 0.4% in the fourth quarter of 2012, an upward revision of 0.2 percentage points from the previous estimate, following an increase of 0.3% in 2012 quarter three (see Figure 6). The level of household expenditure is now 1.6% higher than in 2011 quarter four. The largest increases in household spending in the latest quarter were in housing, water, electricity, gas & other and food and non-alcoholic drink. The largest decrease was in miscellaneous goods & services. Household expenditure has shown positive growth in all quarters of 2012, ranging from 0.3% in quarter three, to 0.5% in the second quarter, with annual growth of 1.2%.

Figure 6: Household final consumption expenditure growth, quarter on quarter, CVM SA

Presents household final consumption expenditure growth, quarter on quarter, CVM SA
Source: Office for National Statistics

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Government final consumption expenditure increased by 0.6% in the fourth quarter of 2012, following an increase of 0.3% in the third quarter. In 2012 government final consumption expenditure rose by 2.2% when compared with 2011.

Gross fixed capital formation (the purchase and disposal of fixed assets used in the production process for more than a year) decreased by 0.2% in the fourth quarter of 2012, following a decrease of 0.4% in the previous quarter (see Figure 7). In 2012 gross fixed capital formation increased by 1.5% when compared with 2011.

Figure 7: Gross fixed capital formation growth, quarter on quarter, CVM SA

Presents gross fixed capital formation growth, quarter on quarter, CVM SA
Source: Office for National Statistics

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Including the alignment adjustment, the level of inventories increased by £1.0 billion in the fourth quarter of 2012. Excluding the alignment adjustment, the level of inventories increased by £1.1 billion.

The deficit in net trade was £6.0 billion in the fourth quarter of 2012, compared with a deficit in net trade of £5.3 billion in the third quarter (see Figure 8).

Exports of goods fell by 1.6% in the fourth quarter of 2012, due to a decrease in exports of fuel. Exports of services fell by 1.8% in 2012 quarter four due to decreases in other business and insurance, partly offset by an increase in communication services. In the fourth quarter of 2012 imports of goods fell by 0.5% due to falls in manufactured goods. Imports of services fell 2.5% in the latest quarter due to decreases in travel and other business services.

Figure 8: Net trade, £ billion, CVM SA

Presents net trade, £ billion, CVM SA
Source: Office for National Statistics

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GDP implied deflator

Annex D (42 Kb Excel sheet) contains growth rates back to Q1 2011.

The gross domestic product implied deflator at market prices for the fourth quarter of 2012 is 1.3% above the same quarter of 2011 (see Figure 9). The weaker growth in the implied deflator in the fourth quarter of 2012 is due to declines in gross fixed capital formation and government final consumption expenditure implied deflators. The GDP implied deflator is calculated by dividing current price (nominal) GDP by chained volume (real) GDP and multiplying by one hundred to convert to an index. It is not used in the calculation of GDP, rather it is generated after the calculation of GDP.

Figure 9: GDP at market prices implied deflator, quarter on same quarter of previous year

Presents GDP at market prices implied deflator, quarter on same quarter of previous year
Source: Office for National Statistics

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GDP analysed by income categories at current prices, table D

Annex C (35 Kb Excel sheet) contains growth rates back to Q1 2011.

GDP at current market prices fell by 0.3% in 2012 quarter four. In 2012 quarter three, GDP at current market prices rose by 2.0%.

Compensation of employees (which includes wages and salaries plus social contributions made by employers) was unchanged in 2012 quarter four. This follows an increase of 1.0% in 2012 quarter three (see Figure 10). Compensation of employees increased by 3.0% in 2012 when compared with 2011.

Figure 10: Compensation of employees growth, quarter on quarter, CP SA

Presents compensation of employees growth, quarter on quarter, CP SA
Source: Office for National Statistics

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The gross operating surplus of corporations, including the alignment adjustment, decreased by 4.3% in 2012 quarter four, following an increase of 5.8% in 2012 quarter three (see Figure 11). Private non-financial corporations’ operating surplus on an aligned basis fell by 3.0% in 2012 quarter four following an increase of 6.4% in 2012 quarter three. On an unaligned basis private non-financial corporations fell by 2.3% in 2012 quarter four following an increase of 2.3% in 2012 quarter three. In the year 2012, gross operating surplus of corporations, including the alignment adjustment, fell by 3.3%.

The income components of GDP provide some background for the continued weak growth in domestic demand, with flat growth in compensation of employees restricting the spending power of households. Furthermore, the lack of demand can be seen within private non-financial corporations’ gross operating surplus figures (company profits). The quarterly path may be affected by special events such as the Diamond Jubilee and the Olympics.

Figure 11: Gross operating surplus of corporations growth, quarter on quarter, CP SA

Presents gross operating surplus of corporations growth, quarter on quarter, CP SA
Source: Office for National Statistics

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Taxes on products and production less subsidies increased by 3.2% in 2012 quarter four following an increase of 0.6% in 2012 quarter three. In 2012 as a whole taxes on products and production less subsidies increased by 1.0%.

Sector accounts, tables I, J1, J2, J3, K1 and K2

Summary

The household saving ratio was 6.7% in 2012 quarter four following 7.9% in the previous quarter. For the year 2012, the saving ratio was 7.1% following 6.5% in 2011.

Net lending by sector, table I

In 2012 quarter four, the central government sector was a net borrower. Local government, public corporations, financial corporations, private non-financial corporations, households and the rest of the world sectors were net lenders.

Annually for 2012, the central government, local government and financial corporations sectors were net borrowers. Public corporations, private non-financial corporations, households and the rest of the world sectors were net lenders.

Central government

Net borrowing was £33.1 billion in 2012 quarter four following net borrowing of £33.2 billion in the previous quarter. For the year 2012, central government net borrowing was £95.2 billion following net borrowing of £120.6 billion in 2011. 

Local government

Net lending was £1.1 billion in 2012 quarter four following net lending of £1.1 billion in the previous quarter. For the year 2012, local government net borrowing was £4.6 billion following net lending of £0.4 billion in 2011.

Public corporations

Net lending was £1.4 billion in 2012 quarter four following net lending of £1.3 billion in the previous quarter. For the year 2012, public corporations net lending was £3.9 billion following net lending of £0.9 billion in 2011.

Financial corporations

Net lending was £1.5 billion in 2012 quarter four following net lending of £2.6 billion in the previous quarter. For the year 2012, financial corporations net borrowing was £16.8 billion following net lending of £31.0 billion in 2011.

Private non-financial corporations

Net lending was £12.4 billion in 2012 quarter four following net lending of £7.2 billion in the previous quarter. For the year 2012, private non-financial corporations net lending was £41.1 billion following net lending of £64.9 billion in 2011.

Household and non-profit institutions serving households

Net lending was £5.1 billion in 2012 quarter four following net lending of £8.4 billion in the previous quarter. For the year 2012, households net lending was £24.7 billion following net lending of £14.4 billion in 2011.

Rest of the world

Net lending was £13.1 billion in 2012 quarter four following net lending of £14.2 billion in the previous quarter, (see Figure 12). For the year 2012, net lending was £54.0 billion following net lending of £17.0 billion in 2011.

Figure 12: Net Lending by Sector £billion, CP SA

Presents net lending by sector CP SA
Source: Office for National Statistics

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The household and non profit institutions serving households (NPISH) sector , tables J1, J2 and J3

The saving ratio in 2012 quarter four was 6.7% following 7.9% in 2012 quarter three, (see Figure 13). This decrease was due to a rise in consumption expenditure partially offset by increased social benefits other than transfers in kind.

Figure 13: Households' Saving Ratio, CP SA

Presents households' saving ratio, CP SA,
Source: Office for National Statistics

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Annually for 2012, the saving ratio was 7.1% following 6.5% in 2011. This increase was due to rises in wages and salaries, social benefits other than transfers in kind and gross operating surplus and mixed income partially offset by an increase in consumption expenditure.

The level of real household disposable income decreased by 0.1% in the latest quarter following an increase of 0.2% in 2012 quarter three, (see Figure 14). This rise is due to a 0.7% increase in nominal gross disposable income offset by growth of 0.9% the household and NPISH final consumption expenditure deflator.

Figure 14: Real Households' Disposable Income, quarter-on-quarter, CVM SA

Presents Real households' disposable income, quarter-on-quarter, CVM SA,
Source: Office for National Statistics

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For the year 2012, real household disposable income increased by 2.1% following a fall of 0.9% in 2011. This reflects a rise in nominal gross disposable income of 4.8% offset by a rise of 2.7% in the household and NPISH final consumption deflator.  The increase in nominal gross disposable income was due to rises in wages and salaries, social benefits other than transfers in kind and gross operating surplus and mixed income.

Private non-financial corporations sector, tables K1 and K2

Net lending of private non-financial corporations was £12.4 billion in the latest quarter following net lending of £7.2 billion in the previous quarter. This increase in net lending in the latest quarter was due to falls in net property income and gross capital formation.

For the year 2012, net lending was £41.1 billion following net lending of £64.9 billion in 2011, this decrease was due to a fall in net property income.
 

International comparisons for Q4 2012

In 2012 quarter four, GDP fell by 0.6% in the euro area and by 0.5% in the European Union as a whole (EU 27), (see Figure 15) unrevised from the previously published estimates. These are based upon second estimates of GDP for the fourth quarter of 2012 published by Eurostat, the statistical office of the European Union. In the third quarter of 2012, GDP decreased by 0.1% in the euro area, and increased by 0.1% in the EU 27.

Compared with the fourth quarter of 2011, seasonally adjusted GDP in the euro area fell by 0.9%. In the EU 27, GDP was 0.6% lower than in the fourth quarter of 2011.

GDP for the United States of America was unrevised at 0.0% in the fourth quarter of 2012, following an increase of 0.8% in the previous quarter. GDP for Japan was revised up from a 0.1% fall to 0.0% in the fourth quarter of 2012, following a 0.9% fall in the third quarter. When compared with the same quarter a year ago, GDP for the United States of America rose by 1.6% and GDP for Japan increased by 0.4%.

Over the whole of 2012, GDP fell by 0.6% in the euro area, and by 0.3% in the EU 27. GDP for the United States of America increased by 2.2% in 2012 when compared with 2011, and increased by 2.0% for Japan over the same period.

More detailed information on these estimates can be found on the Eurostat website. Information on the estimates for the United States of America can be found on the Bureau of Economics Analysis website while information on the estimates for Japan can be found on the Japanese Cabinet Office website.

Figure 15: International GDP growth rates, annual, CVM SA

Presents international GDP growth rates, annual, CVM SA
Source: Office for National Statistics

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Olympic and Paralympic Games

The preliminary estimate of GDP released on 25 October 2012 included a description of where Olympic and Paralympic Games effects may have been seen in the output components of GDP.  This section will describe possible effects of the games on expenditure and income approaches.  As previously stated, it is not possible to quantify these effects, as there may have been offsetting positive and negative effects on different components and in different parts of the UK.

Expenditure approach

The most obvious effect is that of ticket sales, which are included in household final consumption expenditure (for domestic ticket-buyers) and exports (for non-UK residents).  There may also have been a different pattern of household consumption by product category caused by the Olympics. Spending on categories such as hotels & restaurants and transport may have been affected because those not attending the games consumed these services differently during the games period. There may also have been some people who chose not to travel at all during the games period. Additionally a small upward effect on government final consumption expenditure may have resulted from the Games. As well as the ticket sales already mentioned, it might be expected that there would be additional exports of both goods and services from the UK from those non-residents visiting during the Olympic and Paralympic Games.

Income approach

There may have been an effect on the gross operating surplus of corporations, both as a result of Olympic and Paralympic ticket sales and also due to extra sales from corporations providing goods and services to spectators. The compensation of employees figure may have been affected if employers had to recruit extra staff to meet extra demand, although some employers may have just redeployed existing staff from other parts of their organisations.

Summary

The effects of the Olympic and Paralympic Games are not easily identifiable in the GDP data and are not all in the same direction. A detailed article  (229 Kb Pdf) describing possible effects, comparing with earlier Olympic Games was published by ONS on 25 October 2012.

ONS will be publishing a retrospective analysis of all the special events that occurred in 2012, including the Diamond Jubilee and the Olympic and Paralympic Games following the release of the preliminary estimate of GDP for 2013 quarter one.

Revisions, GDP and components, previously published on 27 February 2013

The earliest period open for revision in this release is Q1 2011 (see Figure 16).

Figure 16: Gross domestic product, quarter on quarter growth, CVM SA

Presents gross domestic product, quarter on quarter growth, CVM SA
Source: Office for National Statistics

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Output components:

Output revisions are shown in Annex E (41.5 Kb Excel sheet) of this release.

Expenditure components:

Expenditure revisions are shown in Annex F (37.5 Kb Excel sheet) of this release.

Income components:

Income revisions are shown in Annex G (32.5 Kb Excel sheet) of this release.

Revisions, Sector accounts, previously published on 21 December 2012

Sector accounts revisions are shown in Annex H (37.5 Kb Excel sheet) of this release.

Background notes

  1. Release policy

    This release includes data available up to 13 March 2013. Data are consistent with the Index of Production statistical bulletin published on 12 March 2013 and the current price trade in goods data within the UK Trade statistical bulletin published on 12 March 2013. 

  2. Future Releases

    A preliminary estimate of GDP for the first quarter of 2013 will be published on 25 April 2013. The second estimate of GDP for the first quarter of 2013 will be published on 23 May 2013. A full set of quarterly national accounts for the first quarter of 2013 will be published on 27 June 2013 consistent with ONS' annual Blue Book publication. Blue Book 2013 will be published on 31 July 2013.

  3. Release content and context

    This release includes the third estimate of GDP. Data content for each successive release of GDP varies according to availability.

    The preliminary estimate of GDP is based on output data alone. These are based on survey estimates for the first two months of the quarter with estimates for the third month of the quarter based on forecasts using early returns from businesses. Other (non-survey based) data used in the compilation of the output approach are also based on forecasts.

    For the second estimate of GDP output estimates based on survey data are available for all three months of the quarter, in addition to other significant data sources. Estimates of the expenditure and income approaches to measuring GDP are also available in this release based on a combination of limited survey data, other data sources and forecasts.

    For the quarterly national accounts release, output survey data are available for all three months of the quarter, along with most other data sources. For the expenditure and income approaches to measuring GDP, more extensive survey data are available, in addition to other data sources and a more limited use of forecasts.

    After this release, the current quarter will be subject to revision in accordance with National Accounts revisions policy as further data, annual benchmarks and methodological improvements are implemented.  

    For more information on the different estimates of GDP, ONS has released a video explaining these differences.

  4. Measuring the impact of the 2012 Olympic and Paralympic Games in the National Accounts

    An article titled 'Measuring the impact of the Olympics in the National Accounts' (115.6 Kb Pdf)  is available on the ONS website which describes ONS’ approach to ensuring that the planning, organising and economic activities associated with staging the games are recorded and recognised within the National Accounts.

  5. National accounts methodology and articles

    ONS regularly publishes methodological information and articles to give users more detailed information on developments within the National Accounts; supplementary analyses of data to help users with the interpretation of statistics and guidance on the methodology used to produce the National Accounts.

    Historic experience shows that the output approach provides the best short term estimate of GDP growth given the availability of data in the UK. GDP growth according to the expenditure and income approaches is therefore brought into line with that recorded by output.

    ONS has produced an article 'Interpretating the Recent Behaviour of the Economy' available on the ONS website to aid interpretation of the recent movements in the economy.

    An article describing the 'Content of Blue Book 2013' (62.7 Kb Pdf) was published by ONS on 30 November 2012. It includes forthcoming changes and outlines future plans for subsequent Blue and Pink Books. Further information will be published over the next three months on the changes to be introduced at Blue and Pink Books 2013.  

    An article summarising the upcoming improvements to the estimation of gross fixed capital formation and changes in inventories is now available on the ONS National Accounts methodology and articles web pages. These developments are part of the programme of continuous improvement to the UK National Accounts.   

  6. National accounts classification decisions

    The UK National are produced under internationally agreed guidance and rules set out principally in the European System of Accounts 1995 (ESA 95) and the accompanying Manual on Government Deficit and Debt (MGDD). 

    In the UK the Office for National Statistics (ONS) is responsible for the application and interpretation of these rules. ONS therefore makes classification decisions based upon the agreed guidance and rules and these are published on the ONS website.

  7. Economic context

    ONS publishes a monthly Economic Review discussing the economic background giving economic commentary on the latest GDP estimate and other ONS economic releases. The next article will be published on 3 April 2013.

  8. Basic Quality Information for GDP Statistical Bulletin

    A Quality and Methodology Information (195.1 Kb Pdf) report for this Statistical Bulletin can be found on the ONS website.

  9. Key quality issues

    Common pitfalls in interpreting series: Expectations of accuracy and reliability in early estimates are often too high. Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. Early estimates are based on incomplete data.

    Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. All estimates, by definition, are subject to statistical ‘error’ but in this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures and such mistakes are made quite clear when they do occur.

  10. Reliability

    Estimates for the most recent quarters are provisional and are subject to revision in the light of updated source information. ONS currently provides an analysis of past revisions in the GDP and other Statistical Bulletins which present time series.

    ONS has a webpage dedicated to revisions to economic statistics which brings together ONS work on revisions analysis, linking to articles, revisions policies and key documentation from the Statistics Commission's report on revisions.

    Revisions to data provide one indication of the reliability of key indicators. The tables below show summary information on the size and direction of the revisions which have been made to data covering a five-year period. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. An asterisk (*) shows if the result of the test is significant. 

  11. Revisions to GDP estimates

    Table 2 shows the revisions to month 1 and month 2 estimates of GDP. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from May 2008 (2008 Q1) to February 2013 (2012 Q4). The analysis of revisions between month 2 and month 3 uses month 3 estimates published from March 2008 (2007 Q4) to December 2012 (2012 Q3).

    Table 2: Revisions to early estimates of GDP growth

     
    GDP Growth in the latest period Revisions between early estimates of GDP growth (quarterly, CVM)
    Revisions to GDP growth  % Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
           
    Between M1 and M2 -0.3 0.02 0.06
           
    Between M2 and M3 -0.3 -0.03 0.09

    Table source: Office for National Statistics

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    Table 3 shows the revisions to GDP growth and the household saving ratio between the estimate published three months after the end of the quarter and the equivalent estimate three years later. The analysis uses month 3 estimates first published from March 2005 (2004 Q4) to December 2009 (2009 Q3) for GDP.

    Table 3: Revisions to month 3 estimates of GDP growth and the household saving ratio

    GDP Growth in the latest period Revisions between first publication and estimates three years later
       % Average over the last five years  Average over the last five years without regard to sign (average absolute revision)
           
    GDP growth (quarterly, CVM) -0.3 -0.10 0.40
           
    Household saving ratio 6.7 -0.95 1.21

    Table source: Office for National Statistics

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    Revisions triangles for the main components of GDP from expenditure, output and income approaches and spreadsheets containing revisions triangles (real-time databases) of estimates from 1992 to date and the calculations behind the averages in both tables are available on the ONS website.

    An article titled 'Updated analysis of revisions to quarterly GDP' (206.7 Kb Pdf) published in October 2012, is available on the ONS website.

    ONS has also recently published revisions triangles for current price GDP at market prices and for the GDP implied deflator which will be updated on an ongoing basis. Both are available on the ONS website and are the first to be released in an ongoing development programme to improve the coverage of the revisions triangles.

  12. Balancing GDP

    Information on the methods ONS uses for balancing the output, income and expenditure approaches to measuring GDP can be found on the ONS website.

    The size and direction of the quarterly alignment adjustments in the fourth quarter of 2012 indicate that, for 2012 quarter four, the level of expenditure was slightly higher than that of output and the level of income was lower than that of output.

  13. Further information

    Latest copies of this and other ONS releases are available under Publications on the ONS website. ONS has also produced a short guide to the UK National Accounts (93.6 Kb Pdf) .

    Details of the policy governing the release of new data are available from the media relations office. Also available is a list of the names of those given pre-publication access to the contents of this bulletin.

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Statistical contacts

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