- UK gross domestic product (GDP) in Quarter 4 (Oct to Dec) 2020 is estimated to have grown by 1.0%, following revised 16.1% growth in Quarter 3. Despite two consecutive quarters of growth, the level of GDP in the UK is 7.8% below its Quarter 4 2019 level.
- Over the year 2020 as a whole, GDP contracted by 9.9%, marking the largest annual fall in UK GDP on record.
- In Quarter 4 2020, there have been increases in services, production and construction output, although the output of these industries remained below their Quarter 4 2019 (pre-pandemic) levels.
- There has been a further recovery in government consumption and, to a lesser extent, business investment in Quarter 4 2020 reflecting the easing of public health restrictions, however, the levels remain below their pre-lockdown level.
Gross domestic product (GDP) growth is the main indicator of economic performance. There are three approaches used to measure GDP:
- the output approach
- the expenditure approach
- the income approach
Further information on all three approaches to measuring GDP can be found in the Guide to the UK National Accounts. Data in chained volume measures within this bulletin have had the effect of price changes removed (in other words, the data are deflated), except for income data, which are only available in current prices.
In line with the National Accounts Revisions Policy, revisions are open back to Quarter 1 (Jan to Mar) 2020 as part of this publication. Further information on these revisions is available in Section 7: Revisions to GDP.
In producing a balanced estimate of GDP, we reconcile information on the output, expenditure and income measures of GDP. In our first quarterly estimate, output tends to paint a more reliable picture of what is happening overall in the economy, and so balancing adjustments are applied to the expenditure and income components of GDP where required to align to output; these tend to be applied to components where data content is comparatively weak, or estimates are prone to revision.
Impact of the coronavirus (COVID-19)
This release captures the direct effects of the coronavirus (COVID-19) pandemic and the government measures taken to reduce transmission of the virus. We have faced an increased number of challenges in producing quarterly estimates of UK GDP for Quarter 4 (Oct to Dec) 2020. More detailed information on the challenges and the steps taken to mitigate those can be found in Coronavirus and the effects on UK GDP.
As a result of these challenges, GDP estimates for Quarter 4 2020 are subject to more uncertainty than usual and are likely to have larger than usual revisions in subsequent releases.
Additionally, as a result of the unprecedented impacts and interventions in the economy, we have particular uncertainty around the income approach to measuring GDP in this release. For more information see Section 6: Income.
GDP estimates for Quarter 4 2020 are subject to more uncertainty than usual as a result of the challenges we faced estimating GDP in the current conditions. Differences in the methods for estimating the output of health and education services across different countries mean GDP may be less internationally comparable during the COVID-19 pandemic and recovery than usual, so should be made with increased caution. For more information, please refer to our recently published blog.
End of EU exit transition period
As the UK enters into a new Trade and Cooperation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision makers have the data they need to be informed.
Additionally, the Withdrawal Agreement outlines a need for UK gross national income (a fundamental component of the national accounts, which includes GDP) statistics to remain in line with those of other EU countries until EU budget contributions are finalised for the years in which we were a member, and making budget contributions during the transition period. To ensure this comparability during this period, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards until at least 2024.
As the shape of the UK’s future statistical relationship with the EU becomes clearer over the coming period, we are making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.
In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK’s well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available in early this year.Nôl i'r tabl cynnwys
UK gross domestic product (GDP) is estimated to have increased by 1.0% in Quarter 4 (Oct to Dec) 2020 (Figure 1). The level of GDP in the UK is now 7.8% below its Quarter 4 2019 level.
The monthly path of GDP in Quarter 4 2020 reveals the impact of the differing degrees of restrictions in place. GDP increased by 0.6% in October, where health had the largest contribution because of an increase in the volume of activity, partly due to the coronavirus testing and tracing schemes across the UK. In contrast, accommodation and food service activities acted as a large drag on growth in October as tightening coronavirus measures had an adverse impact on trade and a subsequent lack of demand.
In November, GDP fell by 2.3% as restrictions were in place to varying degrees across all four nations of the UK. The largest contributor to this fall was accommodation and food service activities, followed by wholesale and retail trade, other service activities and arts, entertainment and recreation, reflecting the reintroduction of restrictions in some parts of the UK. These four sectors accounted for nearly 80% of the fall in services.
GDP increased by 1.2% in December 2020 as restrictions were eased early in the month in many parts of the UK. The largest contributor to this increase was accommodation and food service activities and other services, as the easing of restrictions across many parts of the UK in early December boosted demand for these consumer facing services. Health also contributed positively to growth in December 2020, as a result of increased activity, mainly due to the coronavirus testing and tracing schemes across the UK.
Over the year as a whole, GDP contracted by 9.9% in 2020, marking the largest annual fall in UK GDP on record (Figure 2).
More about economy, business and jobs
Nominal GDP increased by 1.6% in Quarter 4 2020, and fell by 4.8% on an annual basis in 2020, driven by declines in Quarters 1 and 2 (Jan to June) 2020. The implied GDP deflator represents the broadest measure of inflation in the domestic economy, reflecting changes in the price of all goods and services that comprise GDP. This includes the price movements in private and government consumption, investment and the relative price of exports and imports. The implied deflator increased by 0.6% in Quarter 4 2020, primarily impacted by movements in the implied price change of government consumption which increased by 1.2% in Quarter 4. Nominal government expenditure increased at a much faster rate in Quarter 4 than the volume of government activity. Compared with the same quarter a year ago, the implied GDP deflator increased by 6.1%.
Several countries have published first estimates of GDP for the final quarter of 2020, including the United States, Germany, France, Italy and Spain (PDF, 327KB). These initial estimates show a mixed picture of economic performance for these countries in Quarter 4 2020. For instance, real GDP is estimated to have grown by 0.1% and 0.4% respectively in Germany and Spain, whilst GDP in France and Italy fell by 1.3% and 2.0% respectively in Quarter 4. Despite these divergent quarterly movements, the level of GDP in each of these countries remains below where it was before the effects of the coronavirus (COVID-19) pandemic. Recent analysis highlights the challenges of making international comparisons of GDP at this time and suggests it maybe useful to compare nominal and real estimates of GDP, as well as estimates excluding government expenditure.
|Real GDP quarter-on-quarter growth (%)|
|Nominal GDP quarter-on-quarter growth (%)|
Download this table Table 1: International comparisons of real and nominal GDP.xls .csv
It is important to note that the extent of these cumulative falls has not been uniform across countries. One reason for this is how we measure non-market output in the UK, where we use direct measures of the volume of activity for health and education. Our initial international engagement has shown that these volume indicators have not been implemented as widely by other National Statistical Institutes (NSIs) in the early estimates of GDP, so there are some challenges around international comparability at this stage. More information on the international comparability of GDP estimates can be found in the recent article International comparisons of GDP during the coronavirus (COVID-19) pandemic.
|Chained volume measures||Current market prices|
|GDP||Household expenditure||Gross fixed |
|GDP per head3||GDP||Compensation|
Download this table Table 2: Headline National Accounts indicators for the UK.xls .csv
In Quarter 4 (Oct to Dec) 2020, there have been increases in services, production and construction output, although the output of these industries all remained below pre-pandemic (Quarter 4 2019) levels in Quarter 4 2020 (Figure 3). Services output fell by 8.9% in 2020, while there was a 8.6% decline in production output and a 12.5% contraction in construction output, largely reflecting the impact of the coronavirus (COVID-19) pandemic and the restrictions in place over the year in response to it.
Services output increased by 0.6% in Quarter 4 2020 and is now 7.3% below Quarter 4 2019 levels (Figure 4). The latest Monthly GDP bulletin has more details on the monthly path in the latest quarter, in which there was a 1.7% increase in services output in December 2020, following a contraction in November due to the reintroduction of coronavirus restrictions in many parts of the UK.
Growth in Quarter 4 was mainly driven by increases in the health and education industries. Health experienced an increase of 12.4%, mainly because of the coronavirus testing and tracing schemes across the UK. Meanwhile, education increased by 5.6%, reflecting higher levels of school attendance in Quarter 4. There is more information on health and education estimates in Quarter 4 2020 in Section 5: Expenditure, which includes details on adjustments to more fully capture new health services such as testing and tracing.
Other industries that made a positive contribution to growth were warehousing and support activities for transportation and postal and courier activities. This was driven by increased online retail activity during this period, because of Black Friday and the build-up to Christmas. According to the December BRC Retail sales monitor, much of the growth in retail shopping in December took place online, “where nearly half of all non-food purchases were made”. Although online sales lessened the impact of restrictions during November and December, output in the wholesale and retail trade and repair of motor vehicles sub-sector fell by 1.9% in Quarter 4 2020, after a 30.9% increase in Quarter 3 (July to Sept) 2020.
Accommodation and food services activities, on the other hand, experienced a 32.8% fall in Quarter 4 2020, as new restrictions were introduced in November. This followed strong growth in Quarter 3 2020 because of the combined impact of easing lockdown restrictions and the Eat Out to Help Out Scheme, which boosted consumer demand for bars and restaurants. During November 2020, output in this sub-sector fell by 44.5% even though, as reported by the latest Bank of England Agent's Summary of Business Conditions, “many pubs, cafes and restaurants were able to offer takeaway options”. In November and December, over three-quarters of businesses in this industry experienced a decrease in turnover in comparison with normal expectations for this time of the year, according to results from Wave 18, Wave 19, Wave 20 and Wave 21 of the Business Impact of COVID-19 Survey (BICS). In relation to a year ago, the output of the accommodation and food services sector is now 51.8% lower.
In Quarter 4 2020, production output increased by 1.8% and is now 4.2% lower than its Quarter 4 2019 level, with manufacturing 3.5% below pre-pandemic (Quarter 4 2019) levels (Figure 5). Manufacturing increased by 3.3% in Quarter 4 2020, driven by increases in 11 out of 13 manufacturing sub-sectors, most notably the manufacture of transport equipment, which grew by 11.5%. The December IHS Markit UK Manufacturing PMI highlights that this expansion may partly reflect “clients bringing forward orders to guard against potential disruption caused by the end of the Brexit transition period”. Another driver behind the growth in manufacturing, specifically in the manufacture of chemicals and chemical products, were the coronavirus testing and tracing schemes that contributed to the 7.1% increase in this sub-sector in Quarter 4 2020.
Manufacture of transport equipment experienced an increase of 11.5% in Quarter 4 2020, but it is still 11.1% below the levels in Quarter 4 2019. According to the Society of Motor Manufacturers and Traders (SMMT), UK car production in December 2020 was 2.3% lower than in December 2019. This was driven by a decline in production for export, with some companies impacted by supply disturbances due to border closures, while output for the domestic market grew in comparison to a year ago.
Meanwhile, the manufacture of basic pharmaceutical products continued to fall in Quarter 4 2020, declining by 6.4% after a 2.5% decline in Quarter 3. This is mainly because of the cumulative impact of weakness from large businesses and highlights the volatile nature of growth in this industry.
Mining and quarrying continued to fall in Quarter 4 2020, by 5.9%, after a 1.4% fall in Quarter 3, mainly because of reduced global demand. The 6.7% decline observed in oil and gas extraction was driven by the introduction of business restrictions impacting on demand.
Construction output increase by 4.6% in Quarter 4 2020, following a 40.7% increase in the previous quarter. In comparison with pre-pandemic (Quarter 4 2019) levels, the construction industry is now 2.8% below. This industry was less affected by the reintroduction of restrictions in Quarter 4, where 80% of businesses continued trading and two-thirds reported unchanged or increased turnover in comparison with what would be normally expected for the time of the year, according to results from Wave 18, Wave 19, Wave 20 and Wave 21 of BICS. Health and safety requirements such as social distancing, however, continued to limit capacity and work levels.
According to the December IHS Markit UK Construction PMI, the recovery seen over recent months was “driven by new projects and stronger underlying demand“, particularly in residential building. The latest Bank of England Agent's Summary of Business Conditions reports that output was “mostly supported by infrastructure projects”, while “demand for household repair and maintenance work was strong”.Nôl i'r tabl cynnwys
The expenditure measure of real gross domestic product (GDP) increased by 1.0% in Quarter 4 (Oct to Dec) 2020, following a 16.1% increase in Quarter 3 (July to Sept) 2020. There was an increase in real government expenditure in Quarter 4, particularly an increase in the volume of healthcare and education. Gross capital formation also contributed positively to real GDP growth, while household consumption experienced a slight fall in the quarter (Figure 6). The levels of business investment and household consumption remain 10.3% and 8.4% lower than their pre-pandemic (Quarter 4 2019) levels respectively.
In Quarter 4 2020, household consumption decreased by 0.2%, following a bounce back of 19.3% in Quarter 3 that reflected an easing of public health restrictions. In particular, there was lower spending in restaurants and hotels, which fell by 20.2% because of the reintroduction of restrictions. These restrictions also affected retail sales, which experienced a 0.4% fall in volume in Quarter 4 2020 according to the latest official retail figures, mainly because of a 4.1% fall in November as a result of enforced closures of non-essential stores in much of the UK. Footfall data on UK high street, retail park and shopping centres show the impact of November restrictions, with UK overall retail footfall falling by around 20 percentage points in this month before recovering to October levels during the first half of December. Meanwhile, household spending on transport increased by 5.9%.
After standing at negative 31 in October and negative 33 in November, the GfK consumer confidence index reported a recovery in December, up to negative 26. It is now one point lower than at the end of Quarter 3, with consumers “looking for good news and they have found it in the form of the UK’s COVID-19 vaccination programme”. This index dropped at the beginning of the pandemic, from negative 7 in February 2020 to negative 34 in April, recovering slowly since June up to the negative 25 points registered in September.
Consumption of government goods and services
Government consumption increased by 6.4% in Quarter 4 2020, after a 12.9% growth in the previous quarter. Nominal government consumption in health increased by 17.2% in Quarter 4. This has been partly reflected in a volume increase of healthcare services, mainly because of the coronavirus testing and tracing schemes. It should be noted that whilst government final consumption expenditure in nominal terms includes spending on coronavirus testing and tracing, such activities are not captured within our source data for government final consumption expenditure in volume terms. We have therefore added testing and tracing adjustments to our volume measure of £200 million in Quarter 2 (April to June) 2020, £1 billion in Quarter 3 2020 and £4.5 billion in Quarter 4. These very approximate initial adjustments are informed by the available in-year spending data for testing and tracing for the period April to September 2020.
We are investigating how to fully capture the activity related to testing and tracing and are aiming to introduce a method early in 2021, effective from April 2020. Smaller adjustments have been made to the health industry in the output approach to GDP, reflecting evidence that some of this activity is already recorded in private sector manufacturing and services. In Quarter 4 this adjustment was £3.75 billion. We will be undertaking further work to understand the supply chains involved in delivering testing and tracing activity, as well as the production and distribution of vacinations, which may lead to some revisions to the industry distribution of these activities. While some vaccinations were given in Quarter 4 2020, activity did not become significant in scale until 2021. We are working on data sources and methods to capture this activity more fully, but we do not expect this to have a significant GDP impact in Quarter 4 2020. There is more information on the latest health estimates in our measuring healthcare through the pandemic blog.
Within healthcare, elective surgery and GP services have shown strong recovery, while the volume of activity in other areas such as dental services remains low because patient capacity is reduced when following coronavirus safety protocols.
The consumption of education services increased by 6% in Quarter 4, after a 23% increase in the previous quarter. Attendance improved overall in Quarter 4 but fell back in December. The volume of education consumption is still 12.1% below its level at the end of 2019, partly reflecting reduced attendance but also our approach to include remote learning.
In Quarter 4 2020, the UK posted a trade deficit of 3.2% of nominal GDP (Figure 7). Excluding precious metals, the trade deficit was 2.7% of nominal GDP. The trade flows of goods picked up further in Quarter 4, particularly in imports, which increased by 14.1% compared with the 7.5% rise in goods exports. The main contributors were machinery and transport equipment, and chemicals, particularly medicinal and pharmaceutical products. Increases in imports of these commodities are consistent with government advice to stockpile medicines ahead of the end of the EU Exit transition period as well as an increase in the production of transport equipment in the UK.
There was a contraction in services trade in Quarter 4 in which exports fell by 9.2% and imports by 7%, with the main driver being other business services. Falls were also seen across intellectual property, telecommunications, compuer and information services and travel services.
Gross capital formation
In Quarter 4 2020, gross fixed capital formation (GFCF) increased by 2.1%, driven by a large increase in transport equipment. Business investment increased by 1.3% in Quarter 4 2020 and is now 10.3% below where it was at the end of 2019 (Figure 8).
According to the Quarter 4 2020 Bank of England Agents’ Summary of Business Conditions, “investment tended to be limited to essential equipment or maintenance, rather than discretionary or strategic projects”, because of “concerns about the strength of the recovery, uncertainty about the outlook, and cash positions”. The latest Bank of England Decision Maker Panel reports that economic uncertainty remained high or very high for 68% of businesses, and “remains much higher than 41% at the start of 2020, while investment remained 20% lower that would otherwise have been because of Covid-19.”
In advance of important dates in the UK’s exit from the European Union during 2019 we saw widespread evidence of businesses stockpiling. As the UK ended its transition period at the end of 2020, there has been further interest in the level of stockpiling.
In the GDP data tables, we see evidence that there has been stockpiling taking place in the imports figures. We see a pattern consistent with that seen in advance of the UK’s original planned departure date at the end March 2019 – particularly including increases in medicinal and pharmaceutical products and cars – albeit less pronounced than in March 2019.
However, the unaligned inventories data show a decrease of £1.1 billion in stocks being held by UK companies in Quarter 4 2020 (Table 3). Note alignment and balancing adjustments are typically applied to the inventories component to help balance the different approaches to GDP – more detail on these can be found in Section 9: Quality and methodology. Therefore, the unadjusted data can provide a better understanding of the change in the inventory position of businesses the whole economy.
Given the complexity of measuring the economy during 2020, and the inherent uncertainty in initial estimates of GDP, it is hard to fully reconcile the evidence of stockpiling in imports data with the unaligned inventories data. Textual analysis from the quarterly stocks survey suggests that some businesses increased their stocks in the lead up to the UK’s departure date from the European Union, although the survey suggests this may have been counter-balanced by inventories decreases in other industries.
Taken together with the imports data this shows evidence of some stockpiling in preparation for the end of the UK’s transition period with the EU, but we currently are unable to clearly quantify the effect of this. We will continue to analyse these data as more mature estimates become available.
|Change in |
|Of which |
|Change in Inventories|
|2020 Q1||Current |
|2020 Q2||Current |
|2020 Q3||Current price||-6214||-1403||-4811|
|2020 Q4||Current |
Download this table Table 3: Change in inventories, including and excluding balancing and alignment adjustments.xls .csv
Nominal gross domestic product (GDP) increased by 1.6% in Quarter 4 (Oct to Dec) 2020, though it remains 2.1% below its pre-pandemic (Quarter 4 2019) level (Figure 9). Compensation of employees (CoE) increased by 2.4% in Quarter 4, mainly driven by an increase in wages and salaries, which grew by 2.1%. It should be noted that these wages and salaries estimates were informed by the latest labour market indicators on pay from HM Revenue and Customs’ (HMRC’s) Pay As You Earn (PAYE) Real Time Information (RTI) data. In Quarter 4 2020, employers’ social contributions grew by 3.3%.
Taxes fell by 2.4% in Quarter 4 whilst subsidies declined by a larger 8.6%. The decline in taxes in Quarter 4 2020 was because of a fall in revenues from Value Added Tax (VAT), though it should be noted that there is wider uncertainty than usual surrounding these estimates. The quarterly fall in subsidies reflects a fall in subsidy payments related to the Coronavirus Job Retention Scheme (CJRS) and the Self Employment Income Support Scheme (SEISS) as well as the end of the Government’s Eat Out to Help Out scheme that took place throughout August 2020.
Following an increase of 14.1% in Quarter 3 (July to Sept), gross operating surplus (GOS) of corporations fell by 0.3% in Quarter 4 2020. However, this mainly reflects the alignment adjustment that is applied to this component for the purpose of balancing the income estimate of GDP for this quarter (Table 4). When the alignment adjustment is removed, GOS of corporations increased by 1.0%. The latest EY UK profit warnings report states that UK profit warnings hit an all-time high in 2020, with UK companies issuing 583 profit warnings over the year. The report highlights the contrast between the first and second half of the year, noting that “COVID-19 dealt a huge blow to earnings expectations in the first half of 2020, triggering record levels of warnings” and adding that “by the second half, expectations adjusted, demand recovered, and profit warnings fell below average – even as COVID-19 restrictions increased in the final quarter”.
|Gross operating surplus|
of private non-financial
|Of which alignment||Gross operating |
|Gross operating |
Download this table Table 4: Gross operating surplus of private non-financial corporations, including and excluding balancing and alignment adjustments.xls .csv
In line with the National Accounts Revisions Policy, the dataset is open to revision back to Quarter 1 (Jan to Mar) 2020 as part of this publication.
This release includes the processing and gross domestic product (GDP) balancing of a number of annual benchmarks for 2018 including the annual International Trade in Services Survey (ITIS).
|Average GDP in chained volume measures||0.1||-0.2||0.1|
|Non-profit institutions serving households||-0.2||-0.5||-0.2|
|Gross capital formation||-2.8||-3.5||3.6|
|Average GDP in current prices||-0.7||0.6||-0.3|
|Compensation of employees||0.0||0.1||-0.1|
|Gross operating surplus of corporations||-2.1||0.5||-1.1|
|Taxes on products & production less subsidies||-0.1||-1.2||661.3|
Download this table Table 5: Revisions to quarter-on-quarter growth for components of GDP.xls .csv
Quarter 1 (Jan to Mar) 2020
GDP growth in volume terms is now estimated to have fallen 2.9%, revised upwards by 0.1 percentage points from the previous estimate.
There have been upward revisions to the expenditure approach to measuring GDP, primarily as a result of revisions to household consumption and general government.
Quarter 2 (Apr to June) 2020
GDP growth in volume terms is now estimated to have fallen 19.0%, a downward revision of 0.2 percentage points from the previous estimate.
This is driven by downward revisions to the expenditure and income approaches to measuring GDP. The expenditure revisions are primarily a result of downward revisions to net trade and government consumption.
Quarter 3 (July to Sept) 2020
GDP growth in volume terms is now estimated to have increased 16.1%, revised upwards by 0.1 percentage points from the previous estimate.
In the output approach to measuring GDP, which is the lead measure in the latest two quarters, there has been an upward revision to services and production.
The revision to services is largely a result of health because of a combination of new data and reprofiling of adjustments to move in line with government expenditure.Nôl i'r tabl cynnwys
Figure 10 and Figure 11 highlight a general decline in response rates for surveys that feed into the GDP first quarterly estimate for Quarter 4 (July to Sept) 2020More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Gross domestic product (GDP) QMI.
The UK National Accounts are drawn together using data from many different sources. This ensures that they are comprehensive and provide different perspectives on the economy; for example, sales by retailers and purchases by households.
Important quality information
There are common pitfalls in interpreting data series, and these include:
- 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”.
Many different approaches can be used to summarise revisions; the “Accuracy and reliability” section in the Gross domestic product (GDP) QMI analyses the mean average revision and the mean absolute revision for GDP estimates over data publication iterations.
Reaching the GDP balance
The different data content and quality of the three approaches – the output approach, the expenditure approach and the income approach – dictates the approach taken in balancing quarterly data. In the UK, there are more data available on output in the short-term than in either of the other two approaches. However, to obtain the best estimate of GDP (the published figure), the estimates from all three approaches are balanced to produce an average, except in the latest two quarters where the output data take the lead because of the larger data content. In usual practice, for the periods prior to the latest two quarters, we aligned the approaches growth rates within a target of plus or minus 0.2 percentage points of the output growth within each quarter. With the large volatile movements in the GDP growth rates in 2020, we have taken the opportunity to review this target to adopt a more flexible target of the larger of plus or minus 0.2 percentage points, or 10% bound around the growth of output within each quarter to reflect the changing nature of the economy.
Information on the methods we use for Balancing the output, income and expenditure approaches to measuring GDP is available.
Alignment adjustments, found in Table M of the GDP quarterly national accounts data tables in 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, larger alignment adjustments are sometimes needed. We also have taken this opportunity to review these targets, understanding the need to adjust these to reflect a larger economy from when these original targets were set. As a result, we have changed the alignment adjustment tolerances to a target limit of plus or minus £3,000 million per quarter.
We faced additional challenges in the GDP quarterly national accounts release and as a result expenditure and income alignment adjustments for the quarters of 2019 do not sum to zero over the year. While this alignment adjustment adds to both expenditure and income GDP in 2019, it does not change the annual 2019 rate of GDP growth to 1 decimal place. For a list of series impacted please refer to the Notice page in GDP quarterly national accounts data tables.
To achieve a balanced GDP dataset through alignment, balancing adjustments are applied to the components of GDP where required (Table 6). They are applied to the individual components where data content is particularly weak in a given quarter because of a higher level of forecast content.
|GDP measurement |
|Q1 2020||Q2 2020||Q3 2020||Q4 2020|
|Change in inventories||Current prices||-1450||1000|
|Chained volume measure||-1450||1000|
|Trade in Services (exports)||Current prices||-1750||1500|
|Chained volume measure||-1750||1500|
|Trade in Services (imports)||Current prices||1000|
|Chained volume measure||1000|
|PNFC GOS||Current prices||-400||2000||1800|
Download this table Table 6: Balancing adjustments applied to the GDP first quarterly estimate dataset for Quarter 1 (Jan to Mar) 2020 to Quarter 4 (Oct to Dec) 2020.xls .csv
Coronavirus (COVID-19) impact on response rates
Figure 10 and Figure 11 highlight a general decline in response rates for surveys that feed into the GDP first quarterly estimate for Quarter 4 (Oct to Dec) 2020. We have undertaken a significant amount of work to ensure that the effect on the quality of our estimates is mitigated as much as possible.
This includes focusing resources on main respondents and industries, methodology reviews including, but not limited to, seasonal adjustment, forecast and imputation, and the use of additional sources of data (in quality assurance). More information on the measures taken can be found in Section 6 of Coronavirus and the effects on UK GDP.
More information on Monthly Business Survey response rates by industry is available.
Quarterly Stocks Survey temporary expansion
The Quarterly Stocks Survey (formerly Inquiry) is used in the compilation of the changes in inventories component. To address users’ concerns about the sample size of the survey and the potential impact on quality, we temporarily increased the sample size from 5,500 to 9,500 businesses from Quarter 2 (Apr to June) 2019. We have continued to boost the sample in subsequent quarters and will continue to do so until further notice.Nôl i'r tabl cynnwys
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