1. Main points

UK GDP in volume terms was estimated to have increased by 0.4% between Quarter 4 (Oct to Dec) 2015 and Quarter 1 (Jan to Mar) 2016, unrevised from the preliminary estimate of GDP published on 27 April 2016. This is the 13th consecutive quarter of positive growth since Quarter 1 2013.

Between Quarter 1 2015 and Quarter 1 2016, GDP in volume terms increased by 2.0%, revised down 0.1 percentage points from the previously published estimate.

GDP in current prices increased by 0.7% between Quarter 4 2015 and Quarter 1 2016.

GDP per head in volume terms was estimated to have increased by 0.2% between Quarter 4 2015 and Quarter 1 2016.

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2. Understanding GDP

GDP growth is the main indicator of economic performance. There are 3 approaches used to measure GDP.

Gross value added (GVA) is the sum of goods and services produced within the economy less the value of goods and services used up in the production process (intermediate consumption). The output approach measures GVA at a detailed industry level before aggregating to produce an estimate for the whole economy. GDP (as measured by the output approach) can then be calculated by adding taxes and subtracting subsidies (both only available at whole economy level) to this estimate of total GVA (more information on creating the preliminary estimate of GDP is available on our methods and sources page).

The income approach measures income generated by production in the form of gross operating surplus (profits), compensation of employees (income from employment) and mixed income (self-employment income) for the whole economy.

The expenditure approach is the sum of all final expenditures within the economy, that is, all expenditure on goods and services that are not used up or transformed in the production process, that is, final consumption (not intermediate) for the whole economy.

The third estimate of GDP is based on revised output data, together with updated data from expenditure and income components. In the Quarterly National Accounts, the output GVA and GDP estimates are balanced with the equivalent income and expenditure approaches to produce headline estimates of GVA and GDP. Further information on all 3 approaches to measuring GDP can be found in the Short Guide to National Accounts.

All data in this bulletin are seasonally adjusted estimates and have had the effect of price changes removed (in other words, the data are deflated), with the exception of income data which are only available in current prices. For further information regarding non-seasonally adjusted data, please refer to the UK Economic Accounts. It can be downloaded directly from the UKEA dataset and on the UKEA main aggregates reference table.

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

In line with national accounts revisions policy, the earliest period open for revision in this release is Quarter 1 (Jan to Mar) 2016.

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3. About the Second estimate of GDP

The second estimate of GDP is produced around 7 and a half weeks after the end of the quarter to provide a timely estimate of GDP. At this stage the data content of this estimate from the output measure of GDP has risen to around 80% of the total required for the final output based estimate. There is also around 50 to 60% data content available to produce estimates of GDP from the expenditure and income approaches.

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4. The quality of the GDP estimate

The national accounts are drawn together using data from many different sources. This ensures that the national accounts are comprehensive and provide different perspectives on the economy, for example sales by retailers and purchases by households. One source of information is from business surveys which use information provided directly from UK businesses. These data are subject to many layers of vigorous quality assurance by highly trained personnel, from clarity and confirmation of individual unit data direct from the business contact to scrutiny of data at the macro level. Other sources of data include other government departments and administrative data, including Value Added Tax data from HM Revenue and Customs (HMRC) which are subject to quality checks and challenge from ONS. By comparing and contrasting these different sources, the national accounts produce a single picture of the economy which is consistent, coherent and fully integrated.

The production and publication of each GDP release is managed by a highly skilled team with a strong emphasis on statistical, analytical and economic debate throughout the production process to publish the headline GDP estimate and components. Although a limited audience have access to GDP data ahead of publication, those involved in the process are selected to ensure each GDP balance achieves a rigorous statistical and economic challenge. A “balancing meeting” is held during each production round where presentations assess GDP and its components against a swathe of external indicators and a focus on GDP headline components. This is attended by senior managers within ONS who challenge the data to ensure consistency and plausibility of the GDP balance. We recognise the importance of transparency and have recently introduced an additional section in our background notes where the balancing adjustments applied - size and the components targeted - are now published.

Accompanying each quarterly and annual production cycle, external quality assurers with particular areas of expertise are invited to challenge and report on the statistical and economic coherence of the headline national account and component dataset. Current assessors include HM Treasury, Bank of England, National Institute of Economic and Social Research, HMRC and Tax Administration Research Centre. Drawing on their personal experience, expertise and subject knowledge, the external quality assurors work in a personal capacity to challenge the synergy of the dataset from a full range of views - from producers, data compilers and from users of the statistics - before final sign off.

Unlike many short-term indicators published by ONS, there is no simple way of measuring the accuracy of GDP. All estimates, by definition, are subject to statistical uncertainty and for many well-established statistics we measure and publish the sampling error and non-sampling error associated with the estimate, using this as an indicator of accuracy. Since sampling is typically done to determine the characteristics of a whole population, the difference between the sample and population values is considered a sampling error. Non-sampling errors are a result of deviations from the true value that are not a function of the sample chosen, including various systematic errors and any other errors that are not due to sampling. The estimate of GDP, however, is currently constructed from a wide variety of data sources, some of which are not based on random samples or do not have published sampling and non-sampling errors available and as such it is very difficult to measure both error aspects and their impact on GDP. While development work continues in this area, like all other G7 national statistical institutes, we don't publish a measure of the sampling error/non-sampling error associated with GDP.

One dimension of measuring accuracy is reliability, which is measured using evidence from analyses of revisions to assess the closeness of early estimates to subsequently estimated values. Many users try to minimise the impact of uncertainty through using the historical experience of revisions as a basis for estimating how confident they are in early releases and predicting how far and in what direction the early release might be revised. Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. The estimate is subject to revisions as more data become available, but between the preliminary and third estimates of GDP, revisions are typically small (around 0.1 to 0.2 percentage points), with the frequency of upward and downward revisions broadly equal. Many different approaches can be used to summarise revisions; the Validation and Quality Assurance section in the Quality and Methodology Information paper analyse the mean average revision and the mean absolute revision for GDP estimates over data publication iterations. In addition to this analysis, Section 14 of the Revisions to GDP and components in Blue Books 2014 and 2015 article updates the metrics used to test revisions performance in order to answer the question “Is GDP biased?”

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5. Headline GDP components and GDP per head

Historical context

As seen in Figure 1, GDP in the UK grew steadily during the 2000s until a financial market shock affected UK and global economic growth in 2008 and 2009. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) 2009, GDP decreased by 6.1%.

This can be compared with previous economic downturns in the early 1980s and early 1990s, which saw lower levels of impact on GDP. In the early 1990s downturn, GDP decreased by 2.2% from the peak in Quarter 2 1990 to the trough in Quarter 3 1991. In the early 1980s downturn, GDP decreased by 5.6% from the peak in Quarter 2 1979 to the trough in Quarter 1 1981.

From Quarter 3 (July to Sept) 2009, growth continued to be erratic, with several quarters between 2010 and 2012 recording broadly flat or declining GDP. This 2-year period coincided with special events (for example severe winter weather in Quarter 4 (Oct to Dec) 2010 and the Diamond Jubilee in Quarter 2 2012) that are likely to have affected growth both adversely and positively. Since 2013, GDP has grown steadily, with the economy exceeding pre-downturn peak levels in Quarter 2 2013.

GDP growth in Quarter 1 2016 has slowed marginally to 0.4% which is just below the average quarterly growth of 0.6% since 2013 when GDP started growing at a steadier pace. Between Quarter 1 2015 and Quarter 1 2016 GDP has grown by 2.0%. GDP is now 7.2% above its pre-downturn peak and has been growing for 13 consecutive quarters.

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

Annex A contains output component growth rates back to Quarter 1 (Jan to Mar) 2015.

Two of the 4 main output industrial groupings within GDP showed increases in Quarter 1 (Jan to Mar) 2016 compared with Quarter 4 (Oct to Dec) 2015; agriculture, forestry and fishing and services, while production and construction showed decreases in this period. Within production, 2 of the 4 components increased and 2 components decreased, which resulted in overall negative growth in total production. All components within the service industries showed increases.

Production output decreased by 0.4% in Quarter 1 2016 compared with Quarter 4 2015, unrevised from the previously published estimate. Within the production sub-industries, output from mining and quarrying, including oil and gas extraction, decreased by 2.3%; manufacturing (the largest component of production) decreased by 0.4% (figure 2), while the electricity, gas, steam and air conditioning supply industries increased by 0.4%. Water supply and sewerage increased by 2.3%.

When comparing Quarter 1 2016 with Quarter 1 2015, production output increased by 0.1%, unrevised from the previously published estimate. Mining and quarrying, including oil and gas extraction, increased by 5.3%, while water supply and sewerage increased by 7.7%. Manufacturing fell by 1.3% between these periods while the electricity, gas, steam and air conditioning supply industries decreased by 3.2%.

Construction output decreased by 1.0% in Quarter 1 2016, revised down 0.1 percentage points from the previously published estimate. Construction output decreased by 1.8% between Quarter 1 2015 and Quarter 1 2016, revised down 0.1 percentage points from the previously published estimate.

The service industries increased by 0.6% in Quarter 1 2016 (Figure 3), unrevised from the previous estimate, marking the thirteenth consecutive quarter of positive growth. This follows a 0.8% increase in Quarter 4 2015.

Output of the distribution, hotels and catering industries increased by 1.1% in Quarter 1 2016, this follows an increase of 1.4% in Quarter 4 2015. The largest contributor to the increase was wholesale and retail trade and repair of motor vehicles and motorcycles.

Output of the transport, storage and communications industries increased by 0.7% in Quarter 1 2016, this follows an increase of 1.2% in Quarter 4 2015. The largest contributor to the increase was computer programming, consultancy and related activities.

Output of the business services and finance industries increased by 0.5% in Quarter 1 2016, this follows an increase of 0.7% in Quarter 4 2015. The largest contributors to the increase were imputed rent and financial service activities, except insurance and pension funding.

Output of the government and other services industries increased by 0.4% in Quarter 1 2016, this follows an increase of 0.4% in Quarter 4 2015. The largest contributor to the increase was human health activities.

Further detail on the service industries’ lower level components can be found in the Index of Services statistical bulletin published on 26 May 2016.

Gross value added (GVA) excluding oil and gas extraction increased by 0.4% in Quarter 1 2016 following a 0.6% increase in Quarter 4 2015.

Figure 4 shows the path of GDP and its headline industries (this excludes agriculture, and includes manufacturing which is a sub-component of production) relative to their level of output achieved in Quarter 1 2008.

Industries have shown differing trends following the recent economic downturn between Quarter 1 2008 and Quarter 2 2009. The construction, manufacturing and production industries were more acutely affected by the deterioration in economic conditions, with output falling from peak to trough by 17.1%, 12.3% and 10.6% respectively. In contrast, output in the service industries only fell by 4.1% from its peak to trough.

Production activity began to grow again in 2010, and the manufacturing and the construction industries showed particular strength – neither industry sustained this growth. Production output fell between 2011 and 2013, falling below levels seen at the height of the downturn in 2009. Construction output also fell sharply in 2012, but started growing again in 2013. Construction output in 2015 as a whole was 3.4% higher than 2014. This marks a deceleration of growth from 7.5% seen in 2014. In Quarter 1 2016 construction output contracted by 1.0% on a quarter on quarter basis, and by 1.8% on a quarter a year ago basis. Although there has been growth across all major components of GDP since 2013, the service industries remain the largest and steadiest contributor to overall economic growth, and are the only headline industry in which output has exceeded pre-downturn levels.

Figure 5 shows the average compound quarterly growth rate experienced over the 5 years prior to the economic downturn in 2008 to 2009, the average growth rate experienced between Quarter 3 2009 and Quarter 2 (Apr to June) 2014 (5 years following the downturn), and the current quarterly growth rate observed in the most recent period (Quarter 1 2016). Compound average growth is the rate at which a series would have increased or decreased if it had grown or fallen at a steady rate over a number of periods. This allows the composition of growth in the recent economic recovery to be compared to the long run average.

The UK experienced slightly slower average compound GDP growth in the 5 years following the economic downturn compared with the 5 years prior: this is also true of the service industries. Figure 5 shows that in Quarter 1 2016, none of the sectors outperformed their post-downturn average rate of growth with the service industries managing to match it. In Quarter 1 2016, both production and manufacturing industries have seen contractions of 0.4%, with construction contracting by 1.0%.

It should be noted that the third column, which shows the current quarterly growth rate, is based on only 1 data point. Consequently users should use caution when making direct comparisons with the long run averages.

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

Annex B contains expenditure component growth rates back to Quarter 1 (Jan to Mar) 2015.

Total domestic expenditure (the sum of all expenditure by UK residents on goods and services that are not used up or transformed in a productive process) increased by 0.7% in Quarter 1 (Jan to Mar) 2016. Annually, between 2014 and 2015 total domestic expenditure increased by 2.6%.

Household final consumption expenditure (HHFCE) increased by 0.7% in Quarter 1 2016 and has increased for 11 consecutive quarters (Figure 6). The largest contribution to the increase in HHFCE in Quarter 1 2016 came from housing, water, gas, electricity and other fuels. When compared with the same quarter a year ago, HHFCE has been rising each quarter since Quarter 4 2011, and was 2.6% higher in Quarter 1 2016 than in the same period a year ago. Between 2014 and 2015, HHFCE increased by 2.8%.

Note that in the quarters of 2013 only, “National” HHFCE chained volume measure data is not the sum of its components.

General government final consumption expenditure (GGFCE) increased by 0.4% in Quarter 1 2016, following a 0.3% increase in Quarter 4 2015. Between Quarter 1 2015 and Quarter 1 2016, GGFCE increased by 2.1%. Between 2014 and 2015, GGFCE increased by 1.5%.

Non-profit institutions serving households’ (NPISH) final consumption expenditure increased by 0.3% in Quarter 1 2016, following a 0.7% increase in Quarter 4 2015. Between Quarter 1 2015 and Quarter 1 2016, NPISH final consumption expenditure increased by 2.0%. Annually, NPISH final consumption expenditure increased by 1.2% between 2014 and 2015.

In Quarter 1 2016, gross fixed capital formation (GFCF) was estimated to have increased by 0.5% (Figure 7), following a decrease of 1.1% in Quarter 4 2015. Between Quarter 1 2015 and Quarter 1 2016, GFCF increased by 1.1%. GFCF increased by 4.1% between 2014 and 2015. More detail on GFCF, including a breakdown of the GFCF components, can be found in the Business investment statistical bulletin published on 26 May 2016.

Business investment was estimated to have fallen by 0.5% in Quarter 1 2016 and decreased by 0.4% between Quarter 1 2015 and Quarter 1 2016. Annually, business investment increased by 5.2% between 2014 and 2015.

Including the alignment adjustment, the level of inventories increased by £3.5 billion in Quarter 1 2016, following an increase of £3.4 billion in Quarter 4 2015. More information on the alignment adjustment can be found in the Balancing GDP section within the background notes of this release.

The trade balance deficit widened from £16.4 billion in Quarter 4 2015 to £18.0 billion in Quarter 1 2016 (Figure 8). The trade position reflects exports minus imports. Following a 0.1% increase in Quarter 4 2015, exports decreased by 0.3% in the latest quarter, while imports increased by 0.8% in Quarter 1 2016 following a 0.9% increase in Quarter 4 2015.

Figure 9 shows the quarterly contribution of the expenditure components to the growth of GDP in chained volume measures. For Quarter 1 2016, the largest positive contribution to GDP came from household final consumption expenditure, which contributed 0.4 percentage points. Gross capital formation contributed a positive 0.3 percentage points, whilst general government final consumption expenditure contributed 0.1 percentage points. These positive contributions to GDP were partially offset by net trade, which contributed a negative 0.4 percentage points to GDP growth.

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8. GDP implied deflator

Annex D contains implied deflator component growth rates back to Quarter 1 (Jan to Mar) 2015.

The GDP implied deflator at market prices for Quarter 1 (Jan to Mar) 2016 is 0.4% above the same quarter of 2015 (Figure 10). The GDP implied deflator is calculated by dividing current price (nominal) GDP by chained volume (real) GDP and multiplying by 100 to convert to an index. It is not used in the calculation of GDP; the deflators for expenditure components, which are the basis for the implied GDP deflator, are used to calculate nominal GDP, not real GDP.

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9. GDP analysed by income categories at current prices, table D

Annex C contains income component growth rates back to Quarter 1 (Jan to Mar) 2015.

GDP at current market prices increased by 0.7% in Quarter 1 (Jan to Mar) 2016, following a 0.2% increase in Quarter 4 (Oct to Dec) 2015. GDP at current market prices increased by 2.5% when compared with Quarter 1 2015. In 2015, GDP at current market prices increased by 2.6%.

Compensation of employees – which includes both wages and salaries, and employers’ social contributions, increased by 0.7% in Quarter 1 2016, following an increase of 0.8% in Quarter 4 2015 (Figure 11). Between Quarter 1 2015 and Quarter 1 2016, compensation of employees increased by 3.3%. In 2015, compensation of employees increased by 3.6%.

The gross operating surplus of corporations (effectively the profits of companies operating within the UK), including the alignment adjustment, increased by 0.8% in Quarter 1 2016 compared with Quarter 4 2015. This follows a decrease of 3.0% in Quarter 4 2015 (Figure 12). Between 2014 and 2015, the gross operating surplus of corporations increased by 0.2%. More information on the alignment adjustment can be found in the Balancing GDP section within the background notes of this release.

Taxes on products and production less subsidies increased by 1.0% in Quarter 1 2016, following an increase of 1.9% in Quarter 4 2015. Between 2014 and 2015, taxes on products and production less subsidies increased by 2.2%.

Figure 13 shows the contribution made by income components to current price GDP. In Quarter 1 2016, there were positive contributions to GDP from compensation of employees which contributed 0.3 percentage points, gross operating surplus of corporations which contributed 0.2 percentage points and taxes on products and production less subsidies which contributed 0.1 percentage points.

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10. GDP per head, table P

In Quarter 1 (Jan to Mar) 2016, GDP per head increased by 0.2%, compared with Quarter 4 (Oct to Dec) 2015. GDP per head is now 1.1% above its pre-downturn peak in Quarter 1 (Jan to Mar) 2008, having surpassed it in Quarter 2 (Apr to June) 2015. Headline GDP exceeded the level of its pre-downturn peak in Quarter 2 2013 and is now 7.2% above its pre-downturn peak (Figure 14).

Between Quarter 1 2015 and Quarter 1 2016, GDP per head increased by 1.3%. Between 2014 and 2015, GDP per head increased by 1.5% compared with a growth of 2.1% between 2013 and 2014.

GDP per head is calculated by dividing GDP in chained volume measures by the latest population estimates and projections. The population estimates used in this release are those published on 25 June 2015 and the population projections used are those published on 29 October 2015.

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11. International comparisons for Quarter 1 (Jan to Mar) 2016

The estimates quoted in this international comparison section are the latest available estimates published by the respective bodies (referenced) at the time of preparation of this statistical bulletin and may subsequently have been revised.

All areas included within our international comparison saw positive growth when comparing Quarter 1 (Jan to Mar) 2016 with Quarter 4 (Oct to Dec) 2015 (Table 2). The European Union (EU28) grew by 0.5% in Quarter 1 2016, marking 12 consecutive quarters of positive growth (Figure 15). In the same period, the group of Euro Area countries (EA19) expanded by 0.5%, following growth of 0.3% in Quarter 4 2015. When comparing Quarter 1 2015 with Quarter 1 2016, EA19 grew by 1.5% whilst the EU28 expanded by 1.7% (Table 2).

Germany and France saw their GDP increase by 0.7% and 0.5% respectively between Quarter 4 2015 and Quarter 1 2016, following an increase for both of 0.3% in the previous quarter.

In Quarter 1 2016, the USA’s economy increased by 0.1%, and by 1.9% between Quarter 1 2015 and Quarter 1 2016. GDP for Japan increased by 0.4% in Quarter 1 2016, following a decrease of 0.4% in the previous quarter. However, between Quarter 1 2015 and Quarter 1 2016, Japan’s economy remained stable.

The combined GDP for the Group of Seven (G7) countries increased by 0.3% in Quarter 1 2016 marking 13 quarters of consecutive growth. When comparing Quarter 1 2015 with Quarter 1 2016, G7 GDP increased by 1.5% and is now 6.6% above its pre-downturn peak in Quarter 1 (Jan to Mar) 2008. This compares to the EU28, which is currently 2.5% above the Quarter 1 2008 peak, and the EA19 at 0.4% above (Figure 17).

More detailed information on these estimates can be found on the Eurostat website. Information on the estimates for the USA can be found on the Bureau of Economic Analysis website; information on the estimates for Japan can be found on the Japanese Cabinet Office website while information for the G7 countries can be found on the Organisation for Economic Co-operation and Development’s website.

Figure 17 shows GDP for the UK, EU, the USA and Japan, all indexed to Quarter 1 2008 (the pre-downturn peak in the UK) to allow comparison of each since that period. The US has had the strongest growth since the pre-downturn peak, and is currently 10.8% above the Quarter 1 2008 index.

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12. Quarterly revisions

GDP and components, previously published on 27 April 2016

Figure 18 shows quarterly revisions between latest and previously published estimates of GDP. Quarter 1 (Jan to Mar) 2016 is the earliest period open for revision in this release.

Revisions for the output approach are shown in Annex E.

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13 .Background notes

What do you think?

  1. We would welcome your feedback on this publication. If you would like to get in touch please contact us via email: gdp@ons.gsi.gov.uk

    Release policy

  2. This release includes data available up to 19 May 2016. Data are consistent with that within the Index of Production statistical bulletin - published on 11 May 2016 and the current price trade in goods data within the UK trade statistical bulletin - published on 10 May 2016.

    Release content and context

  3. This release is the second estimate of GDP. Data content for each successive release of GDP varies according to availability.

  4. The preliminary estimate of GDP is based on output data alone. These are based on survey estimates for the first 2 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.

  5. For the second estimate of GDP output estimates, based on survey data, are available for all 3 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.

  6. For the Quarterly national accounts (QNA) release, output survey data are available for all 3 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.

  7. 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.

  8. For more information on the different estimates of GDP, we have produced a short guide to the UK national accounts which gives more information on the principles of national accounting and the various publications available.

  9. For further information regarding non-seasonally adjusted data, please refer to the UK Economic Accounts. It can be downloaded directly from the UKEA dataset and on the UKEA main aggregates reference table.

    Leap year adjustments

  10. A methodological note on leap year adjustments was published on 29 February 2016, explaining how leap years might affect ONS time series and the methods used to adjust for them as part of seasonal adjustment. Economic Review March 2016 was published on 2 March 2016, providing further commentary on the economy, GDP and leap year effects.

    In this release a seasonal adjustment review has been undertaken of all series on the output components of GDP that show statistically significant leap year effects in light of new data for February 2016.

    Blue Book 2016 changes

  11. In June 2016, we will publish revised figures for the UK national accounts, including gross domestic product (GDP) and balance of payments.

    Changes will be made in line with international standards adopted by all European Union (EU) member states and with worldwide best practice. These, and additional improvements we are making, will ensure that our national accounts continue to provide a reliable framework for analysing the UK economy and comparing it with other countries.

    The improvements made in June 2016 can be broadly split into 3 categories:

    • methodological improvements which impact on GDP; these include improvements to the data sources and methods used to estimate imputed rental and improved estimates of non-complicit value added tax fraud
    • improvements and corrections which do not impact on GDP; these include changes to the treatment of non-market output and social transfers in kind, incorporating the latest FDI benchmark, a correction to the measurement related to second homes and a correction/improvement to the measurement of shares and bonds
    • other regular improvements and methodological changes including updating the national accounts base and reference years by a year, on this occasion from 2012 to 2013 and completing full input-output supply and use balancing process for 2014 for the first time

    We are publishing a series of articles in the lead up to the publication on 30 June 2016 which can be found on the National Accounts articles page on our website. The most recent article detailed the Impact of Blue Book 2016 changes on current price and chained volume measure gross domestic product, 1997 to 2014 and was published on our website on 20 May 2016. The next articles will be published on 7 June 2016 and will detail the changes to Sector Financial Accounts estimates, 1997 to 2014 and to Balance of Payments, 1997 to 2014.

    The first period open for revision in June 2016 is the start of each series.

    Forthcoming changes

  12. In the Quarterly national accounts release to be published on 30 June 2016, we will take the opportunity to standardise our publication of Annexes A to H. From 30 June 2016, the annex section in the bulletin will be replaced by datasets and will be included in UK Quarterly national accounts datasets in Excel and as tables AA to AH in the pdf download as well as on the time series dataset. These are presentational changes and have no data impact and no data will be withdrawn.

    National Statistics Quality Review

  13. In line with the National Statistics Quality Review (NSQR): Review of National Accounts and Balance of Payments, we have published a response, which can be found on the archived version of our website.

    National Accounts Work Plan 2015 to 2018

  14. On 13 July 2015 users of national accounts were invited to respond to an informal consultation on the national accounts work plan which lays out a proposed set of priorities for the next 3 years. This consultation on the national accounts medium-term work plan (covering the period to 2018) closed on 25 September 2015. It followed a previous work plan for national accounts and related outputs following the consultation held in 2013.

    The final report of the national accounts medium-term work plan was published on our website on 27 November 2015.

    Special events

  15. Special events are events that are identifiable; they do not recur on a regular cycle (so are not targeted by seasonal adjustment) and have at least the potential to have an impact on statistics. As explained in our Special Events policy, it is not possible to separate the effects of special events from other changes in the series.

    Continuous improvement of GDP: sources, methods and communication

  16. The UK Statistics Authority published 2 new assessment reports on the Annual and Quarterly National Accounts and Supply and Use Tables and Input-Output Tables on 25 February 2015.

  17. In order to implement improvements reflected in the European System of Accounts 2010 (ESA2010), we will introduce a new survey to collect purchases data, and have published an article detailing our intentions along with a high level project plan.

    VAT project

  18. An article entitled HMRC VAT project update was published on 4 April 2016, the fourth in a series of articles. It outlined plans to use HMRC VAT turnover data as a pilot to replace MBS in summer 2016 for parts of the Index of Services and the Output approach to measuring GDP. Three previous articles have been published in this series:

    Feasibility study into the use of HMRC turnover data within Short-term Output Indicators and national accounts, 14 August 2015.

    Exploitation of HMRC VAT data, 7 October 2015.

    "HMRC VAT project update" 21 December 2015.

    National accounts methodology and articles

  19. We regularly publish methodological information and articles to provide more detailed information on developments within the national accounts. This includes; supplementary analyses of data to help users with the interpretation of statistics and guidance on the methodology used to produce the national accounts.

    National accounts classification decisions

  20. The UK national accounts are produced under internationally agreed guidance and rules set out principally in the European System of Accounts (ESA 2010) and the accompanying Manual on Government Deficit and Debt- Implementation of ESA 2010 – 2014 edition (MGDD).

  21. In the UK, we are responsible for the application and interpretation of these rules. Therefore we make classification decisions based upon the agreed guidance and rules, and these are published on our website.

    Economic context

  22. We publish a monthly Economic Review discussing the economic background, giving economic commentary on the latest GDP estimate and our other economic releases. The next article will be published on 3 June 2016.

    Basic quality information for GDP statistical bulletin

  23. A Quality and Methodology Information report for this statistical bulletin can be found on our website.

    Important quality issues

  24. 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”. 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.

    Reliability

  25. Estimates for the most recent quarters are provisional and are subject to revision in the light of updated source information. We currently provide an analysis of past revisions in the GDP and other statistical bulletins that present time series.

    Our revisions to economic statistics page brings together our work on revisions analysis, linking to articles and revisions policies.

    Revisions to data provide one indication of the reliability of main indicators. Tables 3 and 4 provide a summary on the size and direction of the revisions that have been made to data covering a 5-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.

    Revisions to GDP estimates

  26. Table 3 shows the revisions to month 1 (preliminary) and month 2 (second) estimates of GDP. The analysis of revisions between month 1 and month 2 uses month 2 estimates published from August 2011 (Quarter 2 2011) to May 2016 (Quarter 1 2016). The analysis of revisions between month 2 and month 3 (third estimate of GDP) uses month 3 estimates published from June 2011 (Quarter 1 2011) to March 2016 (Quarter 4 2015).

  27. Table 4 shows the revisions to GDP growth between the estimate published 3 months after the end of the quarter and the equivalent estimate 3 years later. The analysis uses month 3 estimates, first published from June 2008 (Quarter 1 2008) to March 2013 (Quarter 4 2012) for GDP.

  28. 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 our website.

    Balancing GDP

  29. Information on the methods we use for balancing the output, income and expenditure approaches to measuring GDP can be found on our website.

  30. The different data content of the 3 approaches dictates the approach taken in balancing quarterly data. In the UK, there are far more data available on output than in the other 2 approaches. However, in order to obtain the best estimate of GDP (the published figure), the estimates from all 3 approaches are reconciled to produce an average.

  31. Annually, the estimates from all 3 approaches are reconciled through the creation of Input-Output Supply and Use tables for the years for which data are available.

  32. For years in which there is no Supply and Use balance, a statistical discrepancy exists that reflects the differences between the published headline estimate of GDP and the expenditure and income estimates.

  33. For all periods, the expenditure and income estimates are aligned to the published headline GDP figure. Although annual data is aligned for balanced years, there will still be quarterly differences for balanced and post balanced years, due to timing and data content issues. These are dealt with by means of explicit alignment adjustments that are applied to specific components (gross operating surplus of private non-financial corporations in the income approach and changes in inventories in expenditure) to align the 3 approaches. As these are purely quarterly discrepancies, the alignments sum to zero over the year and are published explicitly in the GDP statistical bulletins. They are also published as “of which” items within the specific components, to enable users to ascertain the underlying picture.

  34. Alignment adjustments, found in Table M of this release, have a target limit of plus or minus £2,000 million on any quarter. However, in periods where the data sources are particularly difficult to balance, slightly larger alignment adjustments are sometimes needed. To achieve this balance through alignment, balancing adjustments are applied to the expenditure and income components of GDP as required. They are applied to those individual components where data content is particularly weak in a given quarter due to a high level of forecast content, for example.

  35. The size and direction of the quarterly alignment adjustments in Quarter 1 (Jan to Mar) 2016 indicate that in this quarter, the level of expenditure was lower than that of output while the level of income was higher than the level of output.

  36. Table 5 shows the balancing adjustments applied to the GDP estimates in this publication.

    Further information

  37. You can get the latest copies of this and all our other releases through the release calendar on our website.

  38. Details of the policy governing the release of new data are available from the media relations office. Also available is a list of the ministers and officials who have pre-publication access to the contents of this bulletin.

  39. We are committed to ensuring all information provided is kept strictly confidential and will only be used for statistical purposes. Further details regarding confidentiality can be found in the respondent charters for businesses and households, on our website.

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Contact details for this Statistical bulletin

Matthew Hughes
gdp@ons.gsi.gov.uk
Telephone: +44 (0)1633 455827