Office for National Statistics (ONS) has today published articles setting out the indicative impact on the sector and financial accounts and balance of payments of the previously announced improvements to the UK National Accounts that will be introduced when revised figures, consistent with Blue Book 2017 and Pink Book 2017, are published on 29 September 2017.
The most significant improvements being introduced in September will be the separating of household and non-profit institutions serving households (NPISH) and the introduction of improved data sources for self-employed income and corporate bonds. ONS previously published indicative impacts for these changes for the years 1997 to 2012 on 5 June.
The improved estimates of corporate bond payments are being calculated by making better use of data from the Bank of England as part of the “Flow of Funds” project. Overall, as announced in April, these data show companies were paying more in interest payments on these bonds than estimated under the previous method. As some of the bonds are held overseas this means that, on average, the current account deficit will be larger than previously estimated, while gross national income (GNI) will be lower.
Also announced in April, the new estimates for households, separating out non-profit institutions serving households and utilising new data from HM Revenue and Customs (HMRC) and improved methods, show that an increasing number of self-employed people have been incorporating their businesses and paying themselves increasing levels of dividends, meaning household income will be higher than previously estimated.
The combined impact of removing non-profit institutions serving households and improving methods revises the household saving ratio by between negative 0.4 percentage points in 2001 to positive 2.3 percentage points in 2008. The average absolute revision to the household saving ratio is 0.8 percentage points.
The improvements announced today change the current account deficit by between positive £0.6 billion in 1997 and negative £20.9 billion in 2007 (when the deficit widened from negative 2.4% to negative 3.8% of gross domestic product (GDP)), with the average absolute revision being £10.1 billion. The impact on UK GNI is between positive £9.8 billion in 1997 and negative £17.9 billion in 2007, with the average absolute revision being £6.7 billion.
Commenting on today’s improvements, ONS Chief Economist Nick Vaughan said:
“As the UK has a large and complex financial sector, accurately measuring interest payments is difficult. However, by using better data sources, as part of our plans to transform the way we collect, produce and publish statistics, we are now able to give a much improved estimate of Britain’s financial sector.
“The improved figures for the household sector show they are earning and also saving more. Better sources and methods show that income from self-employment is higher than we previously estimated.”
- The full Detailed assessment of changes to sector and financial accounts: 1997 to 2015 article.
- The full Detailed assessment of changes to balance of payment annual estimates: 1997 to 2015 article.
- The previously published National Accounts Articles – Impact of Blue Book 2017 Changes on the Sector and Financial Accounts, 1997 to 2012 article.