Transcript Document

ONS Economic Forum
Contact: [email protected]
7 April 2014
1
Introduction
Glen Watson, Director General, ONS
ONS Economic Forum
7 April 2014
2
Agenda
09.45
Introduction
10.00
What’s new
10.45
What’s next
11.10
Coffee break
11.30
Changes to public sector finances
12.00
Economic wellbeing measures
12.30
Close
3
What’s new
Peter Patterson, Deputy Chief Economic Adviser
ONS Economic Forum
7 April 2014
4
What’s new
• 2010 input-output analytical tables
• Compendium of UK statistics – covering four
countries of the UK
• Updated GDP revisions article - including
expenditure components
• Article on recent changes to estimates of
business investment
5
GDP and productivity trends
Index nos, 2008Q1=100
105.0
100.0
95.0
90.0
85.0
GDP
Output/Hour
Hours
80.0
75.0
70.0
1997 Q1
1999 Q1
2001 Q1
2003 Q1
2005 Q1
2007 Q1
2009 Q1
2011 Q1
2013 Q1
6
Contributions to productivity changes
Contributions to change in output per hour since 2008Q1, % points
3
Allocation Effect
Manufacturing
Other Services
Total
2
Agric., & Non-Manuf. Prod.
Financial Services
Construction
1
0
-1
-2
-3
-4
-5
-6
-7
2008
2009
2010
2011
2012
2013
7
Dispersion in estimates of GDP growth
Real GDP, index nos, 2010=100
108.0
106.0
Average
Expenditure
104.0
Income
Output
102.0
100.0
98.0
96.0
8
9
Q3
2013 Q1
Q3
2012 Q1
Q3
2011 Q1
Q3
2010 Q1
Q3
2009 Q1
160
Q3
170
2008 Q1
Q3
2007 Q1
Q3
2006 Q1
Q3
2005 Q1
Q3
2004 Q1
Q3
2003 Q1
Q3
2002 Q1
Q3
2001 Q1
Q3
2000 Q1
Q3
1999 Q1
Q3
1998 Q1
Q3
1997 Q1
Manufacturing output and hours
180
Index nos, 2010=100
Output
Hours
150
140
130
120
110
100
90
80
Sectoral balances
12
10
8
Corporations
Government
Household & NPISH
ROW
6
4
2
0
-2
-4
-6
-8
-10
-12
10
Current account balance
% of GDP
4
3
2
1
0
-1
-2
-3
-4
-5
-6
1997 Q1
1999 Q1
Current account
Goods & services
Income
Transfers
2001 Q1
2003 Q1
2005 Q1
2007 Q1
2009 Q1
2011 Q1
2013 Q1
11
Inflation and earnings growth
Per cent changes on a year earlier
6
4
2
0
-2
Public sector
Total pay whole economy
-4
Consumer Prices Index
Private sector
Nov-Jan
2009
Nov-Jan
2010
Nov-Jan
2011
Nov-Jan
2012
Nov-Jan
2013
-6
Feb
2014
12
Goods and services inflation
CPI, % changes on a year earlier
7.0
Goods
6.0
Services
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
1994 Jan 1996 Jan 1998 Jan 2000 Jan 2002 Jan 2004 Jan 2006 Jan 2008 Jan 2010 Jan 2012 Jan 2014 Jan
13
Business investment price deflators
135
125
115
105
95
85
75
2005=100
65
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Business investment
Transport equipment (13%)
Other machinery and equipment (38%)
Other buildings and structures (29%)
Intangible assets (20%)
14
Self-employment (% of total)
15.0
14.5
14.0
13.5
13.0
12.5
12.0
11.5
11.0
1993 Q1
1995 Q1
1997 Q1
1999 Q1
2001 Q1
2003 Q1
2005 Q1
2007 Q1
2009 Q1
2011 Q1
2013 Q1
15
How do we measure unemployment?
Labour Force Survey:
• c. 42,000 households equates to around 100,000
individuals every quarter
• Random sample, stratified by postcode
• Representative of the whole UK population
• Each case weighted by age, sex and geography
• 60 million people  100,000 = 600 (average weight)
• Therefore each interview is equivalent to 600 people
• Complete sample over three months
16
How does the LFS sampling work?
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
80 % of the same people
Jan-Mar
Feb-Apr
Apr-Jun
May-Jul
17
Single month estimates
•
•
•
•
•
Based on one month’s sample
Weighted separately
Seasonally adjusted
Benchmarked to three-month estimates
But…
Greater sampling variability
Can reflect characteristics of sample in a particular
month
18
Single month unemployment
19
LFS NSQR recommendations – single
month
• As an improvement to the currently published single month
estimates, a new weighting methodology based on that used for
the quarterly estimates be developed
• The minor modifications identified by the review be applied to
the seasonal adjustment of the single month estimates and that
they be subject to more regular review in accordance with the
ONS standard seasonal adjustment review
• Continue with the current single month estimates benchmarking
method, unless superseded by developments in the weighting
• The single month estimates metadata be improved
• The existing project to develop state space models be continued
with a higher level of priority than that which is currently being
applied
20
What’s next
Peter Patterson, Deputy Chief Economic Adviser
Graeme Walker, Head of National Accounts
ONS Economic Forum
7 April 2014
21
What’s next
•
•
•
•
•
NSQR of National Accounts
Blue Book 2014
No special events in Q1, despite flooding
Johnson review of price statistics (autumn)
Re-weighting of LFS estimates using 2011
Census data (August)
• New data on capital stocks
22
National Accounts developments
• Preliminary estimate Q1 2014 to be published on
29 April – no special events
• National Statistics Quality Review to be published
early May
• External review undertaken by Kate Barker (ex-MPC member)
and Art Ridgeway (retired Head of NA – StatsCan)
• BB14 data released 30 September
• BB14 on 31 October
• Communications around Blue Book 2014 changes
• Original scoping article 26 November 2013
• Further series of articles, including summaries of impact, AprilJuly
• List to be published shortly
• Seminars
23
NSQRs - Background
Quality
Continuous Improvement
NSQRs ran
from 2002 –
2008
Postponed
when UKSA
established Assessments
NSQRs
Re-launched
2012
Two NSQRs
since
relaunch
• Labour Force
Survey
• NA & BoP
24
ToR – Scope and Priorities
NA, BoP and related outputs
Broad scope:
• Users (issues, uses, priorities)
• Strengths and weaknesses of current
data, systems, methods and processes
• Progress check against previous reviews
Be helpful and realistic
25
Main Topics Covered
Stakeholder
engagement and
communication
Quality Assurance
Balance of
Payments
International flows
Corrections policy
Data Collection
(Surveys)
Regulatory
Requirements
Governance and
decision making
SUT to QGDP
process
Business Register
Sector & Financial
Accounts
Regional Accounts
Flow of Funds
Gross Fixed Capital
Formation
Public Sector
Finances
Administrative Data
Capital Stocks
Deflators and
deflation
Systems and
Processes
Revisions policy
26
Reporting and Implementation
ACTIVITIES
DATE
Ongoing Review investigations &
Report drafting
Now – end April 14
Publish NSQR Report
May 14
Revised NA Work Plan taking into
account NSQR Recommendations
Summer 14
27
Blue Book 2014
• Will contain substantial definitional
and methodological changes
• Changes fall into three parts
• ESA10 changes
• Other changes required by Eurostat
• Other methods changes
28
ESA10 changes
• ESA is the legal NA framework in the
EU
• Updated every 15 years or so
• Currently ESA95
• From September will be ESA10
• ESA10 consistent with SNA08
• Already introduced in some non-EU
countries
• Will be implemented across EU from
September
29
ESA10 changes
• Shorthand for introduction of three new EU
manuals
• ESA10; BPM6; MGDD
• Estimated to add 2½ to 5% to level of GDP
• Main changes for 2014 are
•
•
•
•
Capitalisation of R&D
Weapons
Pensions
Full list in scoping article – 26 November 2013
• Ongoing programme of work until 2017
• Changes impacting on GDP planned for
2014
30
R&D/Weapons
• Now treated as capital expenditure
• Raises level of nominal GDP
• R&D – possibly about £25 billion a year
• Weapons – about £3 billion
• Some impact on change
• R&D article – April
• Weapons article – May
31
Pensions
• ESA10 requires inclusion of imputed
contributions for funded Defined
Benefit schemes
• But not unfunded
• Small impact on GDP levels and
growth
• Main impact on the savings ratio
• Level shift of around +5 p.p
• Article 28 April
Other changes required by Eurostat
• GNI reservations being addressed
• Illegal activities
• NPISH final expenditure
• Full list on ONS website
•
•
•
•
Mainly impacting on levels
Illegal activities – up to £10 billion
NPISH – maximum of over £25 billion
Article(s) - May
33
Other methods changes
• Inventories
• Improved deflation and chain linking
methodology
• GFCF
• More detailed quality assurance
• 5 yearly rebasing of producer price
deflators
• Likely to impact on growth rates
• Detailed articles planned
34
Future dates for GDP releases
• Preliminary estimate of GDP – 29 April
• Second estimate of GDP – 22 May
• Quarterly National Accounts - 27 June
(changed from 26th)
• Preliminary estimate – 25 July
• Second estimate (output only) – 15 August
• Quarterly National Accounts (ESA10 basis)
– 30 September
• Blue Book and Pink Book – 31 October
35
Email: [email protected]
Twitter: @ONS
#ONSeconomy.
36
Public sector finances
Iain Bell, Head of Public Sector Finances and Households
David Bailey
Peter Gittins
ONS Economic Forum
7 April 2014
37
Impact of ESA 2010 on Public Sector
Finance Statistics
Review of Public Sector Finance
Statistics
Background
• European System of Accounts 2010 will be
implemented in National Accounts and Public Sector
Finances in September 2014
• Announced estimates of impact in December 2013
will follow-up and further detail in February 2014
• Launched consultation on the 2013 Review of Public
Sector Finances in December 2013 with consultation
to end of January
• Announced conclusions in February 2014 following
consultation
• All changes being implemented together to ensure
managed as single coherent set of changes rather
than drip feed revisions
ESA10 impact on Public Sector Finances
Peter Gittins
ESA10 implementation
• September 2014 UK publishes ESA10 based National
Accounts and PSF
• This means a number of significant changes for PSF
mostly in 2014 but some later
• Change can have different impacts for PSF and
National Accounts
• We recognise PSF users have specific needs – early
warning of key changes given in December/February
• Scale of impact still not confirmed - especially post 2010
since this is still being processed
Main ESA10 Changes for PSF
•
•
•
•
•
Reclassification of Network Rail
Change in treatment of pension schemes
Mobile phone licences
Royal Mail Pension Plan
Capitalisation of new non financial assets
Network Rail
• New guidance in ESA10 makes Network Rail
a Central Government body
• PSND raised by around £30bn in 2012/13
• PSNB raised by £2.5bn to £3.0bn 2012/13
• Mostly reduces surplus on current budget
• Impact similar in all years from the
reclassification in 2004
Pension schemes
• New guidance on treatment of funded, defined
benefit pension schemes
•
Includes Local Government scheme
• Imputed contributions added to cover the
entitlements/contributions gap
• The imputed contributions increase wage bill
(compensation of employees)
• This is extra current spending which increases
current budget deficit
• PSNB raised by £2bn to £2.5bn in 2012/13
3G/4G mobile phone licenses
• New rules on permits to use natural
resources
• Changes the profile of receipts from sales of
mobile phone licences
• Now rent rather than sale of an asset (current
receipts not capital receipts)
• Rent is accrued over life of the lease even if
paid up front
• 3G licenses recorded as around £1bn per
year over 20 years instead of £22bn in 2000
RMPP transfer to Government in 2012
• New rules on pension scheme transfers
• RMPP assets (around £28bn) no longer count
as a one-off capital transfer to government
• Now a financial advance for social contributions
• Future payments offset by imputed revenue (around £1bn a
year)
• RMPP liabilities/assets gap (around £10bn)
now considered a capital transfer to Royal Mail
• Overall impact is to add around £37bn to PSNB
in 2012/13
New non financial assets
• New rules on when spending is capitalised
•
•
•
Weapons Systems
R&D
Decommissioning costs
• Different impact than for National Accounts
• No impact on PSNB - just changes current
and capital spending ratio
• Current spend adjusted for capital
consumption becomes capital spend
Impact Summary
• PSND(ex) around £30bn higher in 2012/13 - all
from Network Rail
• PSNB(ex) excl RMPP and APF
• Around £5bn higher 2012/13
• Around £2.5bn from Network Rail
• Around £2.5bn from local government pension schemes
• Reduces net lending in 2000/01 due to phone licences
• Base PSNB(ex)
• Also increased by around £37bn in 2012/13 due to
RMPP
2012/13
2011/12
2010/11
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
1999/00
1998/99
1997/98
Impact on PSNB ex (ex RM/APF)
200
150
100
£ Billion
PSNBex
ex
RM/APF
50
0
PSNBex
ex
RM/APF
ESA10
-50
2012/13
2011/12
2010/11
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
1999/00
1998/99
1997/98
Impact on base PSNB ex
200
150
100
£ Billion
PSNBex
50
PSNBex
ESA10
0
-50
Conclusions
• Significant change to PSF from ESA10
• Range of other smaller changes not covered
here (e.g. treatment of tax receipts)
• Additional ESA10 changes through to
2017/18
• Mainly presentational with limited PSF impact
• Committed to helping users understand the
changes
• More detail available in the published articles
• More on detailed impacts before September
Review of Public Sector Finance Statistics
David Bailey
Review of Public Sector Finance
Statistics - timeline
• announced in May 2013
• took forward the recommendations of the UK
Statistics Authority as part of their Review of
the Asset Purchase Facility
• ONS-led review looking at
Presentation and dissemination issues
The future of the “ex-measures”
The ownership of the Bulletin
• consultation launched in Dec 2013
• results of consultation published in Feb 2014
Key findings of Review
Presentation
• improve the presentation of PSF Statistics
• increase the availability of data to help users understand
drivers of change in Public Sector Finances
• increase the transparency of impacts of financial
interventions and other one-off factors on the Public Sector
Finances
Ex-Measures
• the current guidance for defining “ex-measures” is no longer
fit-for-purpose
• replace the existing measure of Public Sector Finances which
excludes financial interventions with a new measure which
excludes only the Public Sector Banks;
• bring consistency to the treatment of shares and
compensation payments in the Public Sector Finances
The ‘ex-measures’ - conclusion
• the existing ex-measure guidance are no longer fit for
purpose
• however there is an ongoing need for ex-measures to
exclude the Public Sector Banks
• Consulted on new principles for any ex-measures
based around:
• Ensuring a measure as inclusive as possible to ensure
transparent reporting of public liabilities whilst allowing
exclusions due to size and lack of correlation with the need
for Government to issue gilts
• Consistency
• between treatments for debt and borrowing
• with National Accounts standards
• with European System of Accounts standards
New ‘ex-measures’ consistent with
these principles
• the Public Sector excluding the Public Sector
Banks (defined as Lloyds, RBS and, prior to 2010,
Northern Rock and Bradford & Bingley)
• accompanied by details of
- impacts of financial interventions on the measure
- separate table showing details on the APF
• No issues raised with either the principles or the
proposed measures through the consultation and
user discussions
Liquid Assets
Current approach
• shares in RBS and Lloyds are currently treated as liquid
assets
• the payments made by the Financial Services
Compensation Scheme (FSCS) are in substance long
term loans, which are currently treated as liquid assets
New approach
• ‘ex measures’ will treat these items consistently with all
other such items – i.e. no longer treated as liquid assets
• ONS will publish supporting information – such as impact
of share sales on debt
Impacts – PSNB ex
Impacts – PSNB ex
Impacts – PSNB ex
Impacts – PSNB ex
Impacts – PSND ex
Impacts – PSND ex
Impacts – PSND ex
Impacts – PSND ex
Implementation
• Changes to figures
• Initial impacts published in Feb 2014
• ‘Shadow table’ showing key aggregates under ESA10 plus
changes from Review of Public Sector Finances will be
published from June 2014
• Full transition to ESA10 in September 2014
• ‘Shadow table’ showing key aggregates under ESA95 and
old ex-measures will be published until April 2015
• Presentational changes
• Some new tables prior to September 2014
• Introduction of new presentational framework and related
tables / commentary in September 2014
• Further tables introduced after September 2014
Economic wellbeing
Glenn Everett, Head of Measuring National Wellbeing
ONS Economic Forum
7 April 2014
67
Economic Well-being: Background
• GDP inevitably and correctly plays a central role in monetary
and fiscal policy
• Traditional measures of progress such as GDP are
increasingly considered an incomplete picture of overall
economic well-being
• Additional economic, social and environmental measures are
needed alongside GDP to provide a complete picture of how
society is doing
• UK’s Measuring National Well-being (MNW) Programme was
launched in November 2010
Measuring National Well-being:
what are we trying to achieve?
An accepted and trusted set of National Statistics to help
people understand and monitor national well-being.
The ‘triple bottom line’
Economy
Social
Environment
Limitations of GDP
• GDP has known weaknesses as a measure
of economic welfare or well-being
• GDP does not consider:
Changes in population
Depreciation of assets
Distribution of income
National and household wealth
Non-market activities
Proposed additional measures
Economy wide
• Gross Domestic Product (GDP) per capita
• Net Domestic Product (NDP) per capita
• Real Net National Disposable Income (RNNDI) per
capita
• Real Net Financial and Physical Assets
Households
• Real Adjusted Household Disposable Income
(RAHDI) per capita
• Real Median Household Income
• Real Household Net Financial and Physical Assets
UK GDP and GDP per capita (1997 = 100)
140
GDP
130
GDP per Capita
120
110
100
90
80
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
UK NDP and GDP per capita (2010 prices)
£
28,000
26,000
24,000
22,000
20,000
18,000
GDP per capita
16,000
NDP per capita
14,000
12,000
10,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Real Net National Disposable Income and GDP per capita
(2010 prices)
£
28,000
26,000
24,000
22,000
20,000
18,000
16,000
GDP per capita
14,000
RNNDI Per capita
12,000
10,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK net financial and produced assets (2010
prices)
£ Billions
8000
7000
6000
5000
4000
3000
2000
1000
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Real adjusted household disposable income and GDP per
capita
£
30,000
25,000
20,000
15,000
10,000
RAHDI per capita
5,000
GDP per capita
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
UK median household income, average household disposable
income and GDP per head
1997 = 100
140
130
120
110
GDP per capita
100
Median income
RHDI per capita
90
80
Real Household Wealth (2010 prices)
Residential wealth
£ Billions
Other non-financial assets
Net financial assets
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Key Findings
• GDP recovered substantially from the falls in recent years,
but GDP per capita has only recovered a little
• Real net national disposable income per capita has
continued to fall gently
• Real adjusted household disposable income per capita
held up well during the deepest phase of the recession but
has been falling gently in the subsequent period
• Median household income and real household income
have grown broadly in line with each other in recent years,
suggesting no major distributional factors
Way forward
• Regular publication of the additional
measures
• Continue to develop and refine additional
measures (eg natural capital, human capital)
• Update the ‘dashboard’ accordingly
• Update the Household Satellite Accounts
Closing remarks
Joe Grice, Chief Economic Adviser, ONS
ONS Economic Forum
7 April 2014
81
Email: [email protected]
Twitter: @ONS
#ONSeconomy.
82