GDP quarterly national accounts, UK: January to March 2015

• UK Gross Domestic Product in volume terms was estimated to have increased by 0.4% between Quarter 4 (Oct to Dec) 2014 and Quarter 1 (Jan to Mar) 2015, revised up 0.1 percentage points from the previous estimate of GDP published 28 May 2015

• GDP was estimated to have increased by 3.0% in 2014, compared with 2013, revised up 0.2 percentage points from the previously published estimate

• Between Quarter 1 2014 and Quarter 1 2015, GDP in volume terms increased by 2.9%, revised up 0.5 percentage points from the previously published estimate

• Revisions for GDP in volume terms are mainly due to the introduction of the interim solution for the Construction and Cost Price Indices which have impacted on both the construction industry and gross fixed capital formation estimates

• GDP in current prices was estimated to have increased by 0.7% between Quarter 4 2014 and Quarter 1 2015, revised down 0.2 percentage points from the previously published estimate

• GDP per head was estimated to have increased by 0.2% between Quarter 4 2014 and Quarter 1 2015, revised up 0.1 percentage points from the previously published estimate. Between 2013 and 2014, GDP per head increased by 2.3%

• The households and non-profit institutions’ serving households saving ratio was estimated to be 4.9% in Quarter 1 2015 compared with 5.9% in Quarter 4 2014. In 2014, the households and non-profit institutions’ serving households saving ratio was estimated to be 6.1%

Change in GDP is the main indicator of economic growth. 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 the methods and sources page of our website).

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 process i.e. final consumption (not intermediate) for the whole economy.

The second estimate of GDP is based on revised output data, together with data from some expenditure and income components. 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.

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

In line with national accounts revisions policy, the earliest period open for revision in this release is Quarter 1 (Jan to Mar) 2014.

The Quarterly National Accounts are typically published around 90 days after the end of the quarter. At this stage the data content of this estimate from the output measure of GDP has risen to around 91% of the total required for the final output based estimate. There is also around 90% data content available to produce estimates of GDP from the expenditure approach and around 70% data content from the income approach.

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.

All estimates, by definition, are subject to statistical uncertainty and for many well-established statistics we measure and publish the sampling error associated with the estimate, using this as an indicator of accuracy. The estimate of GDP, however, is currently constructed from a wide variety of data sources, some of which are not based on random samples and as such it is very difficult to measure the sampling error. While development work continues in this area, like all other G7 national statistical institutes, we don’t publish a measure of the sampling error associated with GDP.

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. Economic growth resumed towards the end of 2009, but on average at a slower rate than the period prior to 2008. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) and Quarter 3 (July to Sept) 2009, GDP decreased by 6.0%. This can be compared to 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 2009, growth continued to be erratic, with several quarters between 2010 and 2012 recording broadly flat or declining GDP. This two-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 3 2013.

Quarter 1 2015 has shown continued strength with GDP growing by 0.4% compared with the previous quarter; by 2.9% between Quarter 1 2014 and Quarter 1 2015, and by 3.0% between 2013 and 2014. GDP has now increased for 9 consecutive quarters, breaking a pattern of slow and erratic growth from 2009.

Annex A contains output component growth rates back to Quarter 1 (Jan to Mar) 2014.

The output components of GDP showed increases in Quarter 1 2015 for production and services. There were decreases for agriculture, forestry and fishing and construction.

Production output increased by 0.2% in Quarter 1 2015 compared with Quarter 4 (Oct to Dec) 2014, revised up 0.1 percentage points from the previously published estimate. Within the production sub-industries, output from mining and quarrying, including oil and gas extraction, fell by 0.5%; manufacturing (the largest component of production) increased by 0.1% (Figure 2), while electricity, gas, steam and air conditioning supply industries rose by 2.8%. Water supply and sewerage rose by 0.2%.

When comparing Quarter 1 2015 with Quarter 1 2014, production output rose by 1.0%, revised up 0.4 percentage points from the previously published estimate. Manufacturing increased by 1.4% between these periods while electricity, gas, steam and air conditioning supply industries increased by 4.1%. Mining and quarrying, including oil and gas extraction, fell by 0.7% while water supply and sewerage contracted by 2.0%.

Construction output decreased by 0.2% in Quarter 1 2015, revised up 0.9 percentage points from the previously published estimate. Construction output rose by 4.5% between Quarter 1 2014 and Quarter 1 2015, revised up 4.8 percentage points from the previously published estimate. More information on the revisions to construction output is available in the Quarterly Revisions section of this release.

The service industries grew by 0.4% in Quarter 1 2015 (Figure 3), unrevised from the previous estimate, marking the ninth consecutive quarter of positive growth. This follows a 0.9% increase in Quarter 4 2014.

Output of the distribution, hotels and restaurants industries rose by 1.1% in Quarter 1 2015, following a 1.4% increase in Quarter 4 2014. The increase in the latest quarter was largely due to retail trade, except of motor vehicles and motorcycles, and wholesale trade, except of motor vehicles and motorcycles.

Output of the transport, storage and communication industries rose by 0.7% in Quarter 1 2015, following a 1.0% increase in Quarter 4 2014. The largest contributor to the increase was motion picture, video and TV programme production, sound recording and music publishing activities.

Business services and finance industries’ output rose by 0.1% in Quarter 1 2015, following a 1.4% increase in Quarter 4 2014. The largest upward contribution to growth in Quarter 1 2015 came from rental and leasing activities and activities of head offices; management consultancy activities.

Output of government and other services rose by 0.3% in Quarter 1 2015 and was flat in Quarter 4 2014. In the latest quarter the largest upward contribution came from activities of households as employers of domestic personnel, and human health activities.

Further detail on the service industries’ lower level components can be found in the Index of Services statistical bulletin published on 30 June 2015.

Gross value added (GVA) excluding oil and gas extraction rose by 0.4% in Quarter 1 2015 following a 0.8% increase in Quarter 4 2014.

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. In the decade prior to the downturn, the services industry grew steadily, while production output was broadly flat over the same period. Construction activity grew strongly in the early part of the decade, and although there was a temporary decline in the mid-2000s - this was reversed by the end of 2007.

Industries have shown differing trends following the recent economic downturn. 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%, 12.2% and 10.7% respectively. In contrast, output in the services industry only fell by 4.0% from its peak to trough.

Production activity began to grow again in 2010, and the manufacturing and the construction industries showed particular strength, however neither industry sustained this growth. Production output fell in both 2011 and 2012, falling below levels seen at the depth of the downturn in 2009. Construction output also fell sharply in 2012, with output falling close to its 2009 trough after further contraction in Quarter 1 2013. Construction output improved over much of 2014. However, output declined in the most recent quarter. Although, there has been widespread growth across all major components of GDP since the start of 2013, the service industry remains the largest and steadiest contributor to overall economic growth, and is 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 (July to Sept) 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 2015). 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 services industry. Figure 5 shows that in Quarter 1 2015, all industries shown underperformed compared to the post-downturn average rate of growth, with the exception of production, which performed at the same rate. The electricity, gas and steam industries have shown particular strength when compared with both the production 5 year average, prior and post the downturn. 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.

Annex B contains expenditure component growth rates back to Quarter 1 (Jan to Mar) 2014.

Gross 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) rose by 1.0% in Quarter 1 (Jan to Mar) 2015, following no change in Quarter 4 (Oct to Dec) 2014. Annually, between 2013 and 2014 gross domestic expenditure increased by 3.5%.

Household final consumption expenditure rose by 0.9% in Quarter 1 2015, revised up 0.4 percentage points from the previously published estimate, and has increased for 15 consecutive quarters (Figure 6). The largest increase in household final consumption expenditure in Quarter 1 2015 came from housing, and recreation and culture. When compared with the same quarter a year ago, household final consumption expenditure has been rising each quarter since Quarter 4 2011, and was 3.4% higher in Quarter 1 2015 than in the same period a year ago. Between 2013 and 2014, household final consumption expenditure increased by 2.6%.

Figure 7 shows the contribution of different categories of goods and services to the growth in UK household domestic expenditure, quarter-on-corresponding-quarter-of-previous-year. The positive consumption growth since Quarter 4 2011 is shown to have been broad-based across both goods and services. The most notable change over recent periods is the return to a negative contribution from consumption of non-durable goods. However, in the first quarter of 2015, the consumption of non-durable goods has returned to a positive contribution of 0.4 percentage points. Non-durable goods include items which can only be consumed or used once; a good example of these is food products.

Non-profit institutions serving households’ (NPISH) final consumption expenditure rose by 2.6% in Quarter 1 2015, following a 3.2% fall in Quarter 4 2014, unrevised from the previously published estimate. Between Quarter 1 2014 and Quarter 1 2015, NPISH final consumption expenditure increased by 2.3%. Annually, NPISH final consumption expenditure rose by 0.9% between 2013 and 2014.

In Quarter 1 2015, gross fixed capital formation was estimated to have increased by 2.0% (Figure 8), revised up 0.5 percentage points from the previously published estimate. Between Quarter 1 2014 and Quarter 1 2015, gross fixed capital formation increased by 5.0%. Gross fixed capital formation rose by 8.6% between 2013 and 2014. More information on the revisions to gross fixed capital formation is available in the Quarterly Revisions section of this release.

In Quarter 1 2015, we migrated to the Quarterly Acquisitions and Disposals of Capital Assets Survey (QCAS) from the Quarterly Survey of Capital Expenditure (CAPEX) as one of the main data sources for gross fixed capital formation. The main reasons for the changes to the survey are to move to the updated European System of Accounts (ESA) 2010 manual, the international guidance for national accounts. More information on this change and more detail on gross fixed capital formation can be found in the Business Investment statistical bulletin published on 30 June 2015.

Business investment was estimated to have risen by 2.0% in Quarter 1 2015, revised up 0.3 percentage points from the previously published estimate. Between Quarter 1 2014 and Quarter 1 2015, business investment increased by 5.7%. Annually, business investment rose by 8.0% between 2013 and 2014.

Excluding the alignment adjustment, the level of inventories increased by £4.5 billion in Quarter 1 2015, following an increase of £1.4 billion in Quarter 4 2014. Including the alignment adjustment, the level of inventories increased by £2.5 billion in Quarter 1 2015, following an increase of £3.4 billion in Quarter 4 2014. More information on the alignment adjustment can be found in the Balancing GDP section within the Background Notes which accompany this release.

The trade balance deficit widened from £10.6 billion in Quarter 4 2014 to £13.4 billion in Quarter 1 2015 (Figure 9). The trade position reflects exports minus imports. Following a 4.5% increase in Quarter 4 2014, exports rose by 0.4% in the latest quarter, while imports increased by 2.3% following a 1.6% increase in Quarter 4 2014. Between 2013 and 2014, exports increased by 0.5%, while imports increased by 2.4%.

Exports of goods rose by 0.3% in Quarter 1 2015, due mainly to an increase in chemicals, specifically pharmaceutical products. Exports of services rose by 0.5% in Quarter 1 2015, due to increases in financial services. In Quarter 1 2015 imports of goods rose by 2.1%, due to an increase in finished manufactures, specifically imports of cars. Imports of services increased by 2.6% in Quarter 1 2015, due to an increase in financial and transport services.

Figure 10 shows a breakdown of the trade components and their contribution to GDP growth from Quarter 1 2008 to Quarter 1 2015. The series indicates that in the most recent quarter the UK trade balance has made a negative contribution to GDP growth. Imports of goods rose by 6.7% when comparing Quarter 1 2014 with Quarter 1 2015, contributing -1.7 percentage points to GDP growth, with this being partially offset by exports of goods, which increased by 4.1% in the same period, contributing 0.7 percentage points to GDP growth.

Figure 11 shows the quarterly contribution of the expenditure components to the growth of GDP in chained volume measures. For Quarter 1 2015, the largest positive contribution to GDP came from household final consumption expenditure, which contributed 0.5 percentage points. Gross fixed capital formation contributed 0.3 percentage points to GDP; general government final consumption expenditure contributed 0.2 percentage points and NPISH contributed 0.1 percentage points. There were negative contributions to GDP from net trade and changes in inventories which contributed 0.6 and 0.2 percentage points respectively.

Annex D contains implied deflator component growth rates back to Quarter 1 (Jan to Mar) 2014.

The GDP implied deflator at market prices for Quarter 1 2015 is 1.4% above the same quarter of 2014 (Figure 12). 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.

Annex C contains income component growth rates back to Quarter 1 (Jan to Mar) 2014.

GDP at current market prices rose by 0.7% in Quarter 1 (Jan to Mar) 2015, following a 0.9% increase in Quarter 4 (Oct to Dec) 2014. GDP at current market prices rose by 4.3% when compared to Quarter 1 2014. In 2014, GDP at current market prices rose by 4.6%.

Compensation of employees – which includes both wages and salaries, and pension contributions – decreased by 0.5% in Quarter 1 2015, following an increase of 1.1% in Quarter 4 2014 (Figure 13). Between Quarter 1 2014 and Quarter 1 2015, compensation of employees rose by 3.9%. Between 2013 and 2014, compensation of employees rose by 3.1%.

The gross operating surplus of corporations (effectively the profits of companies operating within the UK), including the alignment adjustment, rose by 3.5% in Quarter 1 2015 compared with the previous quarter; this follows a decrease of 1.7% in Quarter 4 2014 (Figure 14). Between 2013 and 2014 the gross operating surplus of corporations rose by 5.6%. More information on the alignment adjustment can be found in the Balancing GDP section within the Background Notes which accompany this release.

On an unaligned basis, private non-financial corporations’ operating surplus fell by 0.1% in Quarter 1 2015, following a 1.1% fall in Quarter 4 2014. Private non-financial corporations’ operating surplus on an aligned basis rose by 4.8% in Quarter 1 2015 following a decrease of 4.5% in Quarter 4 2015.

Taxes less subsidies on products and production fell by 2.7% in Quarter 1 2015, following an increase of 3.4% in Quarter 4 2014. Between 2013 and 2014 taxes less subsidies on products and production rose by 4.8%.

Figure 15 shows the contribution made by income components to current price GDP. In Quarter 1 2015, there were positive contributions to GDP from gross operating surplus of corporations and other income which respectively contributed 0.8 and 0.5 percentage points. Compensation of employees contributed a negative 0.3 percentage points to GDP while taxes less subsidies contributed a negative 0.3 percentage points.

In Quarter 1 (Jan to Mar) 2015, UK GDP per head increased by 0.2% compared with Quarter 4 (Oct to Dec) 2014, having increased by 0.7% in the previous quarter. This was lower than the 0.4% increase in GDP in Quarter 1 2015. In Quarter 1 2015 GDP per head remained 0.6% below its pre-economic downturn peak level (Quarter 1 2008), while GDP exceeded the level of its pre-downturn peak in Quarter 3 (July to Sept) 2013, and in Quarter 1 2015 was 4.5% above its pre-downturn peak (Figure 16).

Between Quarter 1 2014 and Quarter 1 2015, GDP per head rose by 2.2%. Between 2013 and 2014, GDP per head rose by 2.3%.

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 26 June 2014.

Summary

Annually for 2014, the central government, financial corporations, private non-financial corporations and the household and non-profit institutions serving households sectors were net borrowers. Local government, public corporations and the rest of the world sectors were net lenders.

In Quarter 1 (Jan to Mar) 2015, the central government, local government, financial corporations, private non-financial corporations and households and non profit institutions serving households sectors were net borrowers. The public corporations and rest of the world sectors were net lenders (Figure 17).

Compared to the previous year, in 2014, there has been a switch to net lending in the local government sector and a switch to net borrowing in the private non-financial sector. All other sectors remain unchanged.

There were no switches to net lending/borrowing by sector when compared to the previous quarter.

Table I has further details.

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

Saving ratio:

Annually for 2014 the saving ratio was 6.1%, compared with 6.4% in 2013.

The saving ratio in Quarter 1 2015 was 4.9%, compared with 5.9% in the previous quarter (Figure 18).

This decrease in the latest quarter reflects increased taxes on income and wealth with a fall in social benefits and compensation of employees partially offset by a rise gross operating surplus and mixed income. Figure 19 shows the main components contributing to the quarterly saving ratio movement.

The decrease in the saving ratio in 2014 reflects increases in consumption expenditure, taxes on income and wealth and a fall in social benefits, which are partially offset by increases in wages and salaries, gross operating surplus, and mixed income.

What is the saving ratio?

The saving ratio estimates the amount of money households and NPISH have available to save (known as gross saving) as a percentage of their total disposable income (known as total available resources). Both can be found in table J3 of this release.

Gross saving estimates the difference between households’ and NPISH total available resources (mainly wages received, revenue of the self-employed, social benefits and net income such as interest on savings and dividends from shares but excluding taxes on income and wealth) and their current consumption (expenditure on goods and services).

All of the components that make up gross saving and total available resources, and in fact all sector accounts data apart from real household disposable income (RHDI), are estimated in current prices (CP). These are sometimes known as nominal prices, meaning that they include the effects of price changes.

The saving ratio is published in both non-seasonally adjusted (NSA) and seasonally adjusted (SA) formats with the latter removing seasonal effects to allow comparisons over time. However, the saving ratio can be volatile and is sensitive to even relatively small movements to its components, particularly on a quarterly basis. This is because saving is a small difference between two numbers. It is therefore often revised at successive publications when new or updated data are included.

Real household and NPISH disposable income:

For the year 2014, real household and NPISH disposable income increased by 0.8%, following a rise of 0.1% in 2013. This reflects an increase of 2.3% in nominal gross disposable income, partially offset by a 1.5% rise in the household and NPISH final consumption deflator. This increase in nominal gross disposable income was predominantly due to a rise in wages and salaries together with increased gross operating surplus and mixed income, partially offset by increased taxes on income and wealth and decreased social benefits.

The level of real household and NPISH disposable income increased by 0.2% in Quarter 1 2015, following an increase of 1.5% in the previous quarter (Figure 20).

The rise in the latest quarter reflects a 0.4% fall in nominal gross disposable income offset by a fall of 0.6% in the household and NPISH final consumption deflator. The fall in nominal gross disposable income was due to a rise in taxes on income and wealth and falls in social benefits and compensation of employees partially offset by a rise in gross operating surplus and mixed income.

Figure 21 shows the main components contributing to the quarterly movement of gross disposable income.

What is real household and NPISH disposable income?

There are two measures of household and NPISH income, in real terms or in current prices (or nominal as it is often called), and both of these time series can be found in table J2 of this release.

Gross household and NPISH disposable income (GDI) is the estimate of the total amount of money from income that households and NPISH have available from wages received, revenue of the self-employed, social benefits and net income (such as interest on savings and dividends from shares) less taxes on income and wealth. All the components that make up GDI are estimated in current prices.

However, by adjusting GDI to remove the effects of inflation, we are able to estimate another useful measure of disposable income called real disposable income. This is a measure of real purchasing power of household and NPISH incomes, in terms of the physical quantity of goods and services they would be able to purchase. We use the household and NPISH expenditure deflator (which can be found in table J2 of this release) to remove the effects of price inflation.

Private non-financial corporations’ sector (tables K1 and K2)

For the year 2014, net borrowing was £4.4 billion following net lending of £13.3 billion in 2013. This decrease was due to a fall in net property income together with a rise in gross capital formation partially offset by an increase in gross operating surplus.

Net borrowing of private non-financial corporations’ was £2.9 billion in Quarter 1 2015, following net borrowing of £3.8 billion in the previous quarter. This decrease in net borrowing in the latest quarter was due to a rise in gross operating surplus partially offset by a fall in net property income.

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, excluding the United States of America (USA) saw positive growth when comparing Quarter 4 (Oct to Dec) 2014 and Quarter 1 (Jan to Mar) 2015 (Figure 22). The European Union (EU28) grew by 0.4% in the first quarter of 2015 following 7 quarters of positive growth (Table 2). In the same period, the eurozone (EA19) expanded by 0.4%. When comparing Quarter 1 2014 with Quarter 1 2015, EA19 grew by 1.0 % whilst EU28 expanded by 1.5% (Figure 23).

Germany saw its GDP grow by 0.3% between Quarter 4 2014 and Quarter 1 2015, a decrease of 0.4 percentage points from the previous quarter-on-quarter growth. In contrast, France saw growth of 0.6% between Quarter 4 2014 and Quarter 1 2015 having increased by 0.1% between Quarter 3 (July to Sept) 2014 and Quarter 4 2014.

In the first quarter of 2015 the USA’s economy saw no growth, however when comparing Quarter 1 2014 and Quarter 1 2015, GDP for the USA increased by 2.9%. GDP for Japan continued to increase with Quarter 1 2015 growing by 1.0%, following a 0.3% increase in the previous quarter. Although between Quarter 1 2014 and Quarter 1 2015, Japan’s economy contracted at a rate of 1.0%, this was revised up from the previously estimated 1.4% decrease.

GDP for the Group of Seven (G7) countries increased by 0.2% in Quarter 1 2015, following a 0.5% increase in the previous quarter. When comparing Quarter 1 2014 with Quarter 1 2015, G7 GDP increased by 1.7% and is now 5.3% above its pre-recession peak in Quarter 1 2008.

Figure 24 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.

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.

GDP and components, previously published on 28 May 2015

Figure 25 shows quarterly revisions between latest and previously published estimates of GDP. The earliest period open for revision in this release is Quarter 1 (Jan to Mar) 2014.

Revisions in this release are due to the replacement of forecasts with actual survey or external source data and the change in methodology for the Construction Price and Cost Indices.

Table 3 shows the revisions to quarter-on-quarter growth for GDP.

The revisions to the headline quarter-on-quarter growth for GDP are explained in the section ‘Revisions to headline GDP quarter-on-quarter growth’ of this bulletin.

Table 4 shows the revisions to the quarter–on-same-quarter a year ago growth for GDP.

The revisions for the quarter-on-same-quarter a year ago growths for GDP in 2014 are due to revisions in 2014 as 2013 has been unrevised in this release. For Quarter 1 2015, revisions are the impact of both revisions in this quarter and the corresponding quarter of 2014. These revisions are explained in the ‘Revisions to headline GDP quarter-on-quarter growth’ section of this bulletin.

Revisions to headline GDP quarter-on-quarter growth

Upward revisions to the annual 2014 arise mainly from higher output estimates (in particular construction); higher income estimates (higher company profits) and to a lesser extent higher expenditure (higher gross capital formation and households).

The Quarter 1 2015 upward revision to growth arises from higher output, expenditure and income measures, with particular strength coming from construction, gross fixed capital formation, household consumption and company profits. The quarterly pattern of growth revisions is as follows:

GDP for Quarter 1 2014 was unrevised.

GDP for Quarter 2 (Apr to June) 2014 has been revised up by 0.1 percentage points to 0.9%. This is due to upward revisions for the agriculture and construction industries within the output approach. The former was due to annual benchmark data being returned and the latter is the result of the change in methodology for the Construction Price and Cost Indices along with the incorporation of late data and new seasonal adjustment parameters. These upward revisions were partially offset by downward revisions to the expenditure and income measures. Broad-based upward revisions to gross domestic expenditure components were offset by a large upward revision to imports of goods.

GDP for Quarter 3 (July to Sept) 2014 has also been revised up by 0.1 percentage points to 0.7%. Similarly to the previous quarter, both agriculture and construction contribute positively to this revision. Also, broad-based expenditure upward revisions to gross domestic expenditure components including household consumption and gross fixed capital formation were offset by a large downward revision to exports of goods and a large upward revision to imports of goods. There were upward revisions to the income approach to measuring GDP for financial corporations’ gross operating surplus, again due to external data sources replacing forecast data used in the previous publication.

GDP for Quarter 4 (Oct to Dec) 2014 has been revised up by 0.2 percentage points to 0.8%. Continuing the revision story of previous quarters, agriculture and construction continue to show strong upward revisions in this quarter. In addition there were upward revisions from the transport, storage and communications and business services and finance industries. Income saw further upward revisions to all corporations’ components.

GDP for Quarter 1 2015 has been revised up by 0.1 percentage points to 0.4%. All three measures saw upward revisions in this quarter with key drivers remaining consistent with those of the previous quarters.

Key data changes to Output components

Construction: On 12 June 2015 ONS launched the interim solution for Construction Price and Cost Indices. The supporting article presented the impacts of the interim solution on output in the Construction Industry and Gross Domestic Product (GDP) when measured from the output approach. Output in the construction industry acts as data source for GDP when measured from the output approach and has a weight of 6.4%. A change in output in the construction industry of 0.8 percentage points will thus revise GDP by 0.0512. The potential revisions to GDP, all else equal, as a result of the introduction of this interim solution are shown in table 3 in the construction article. This methods change wasn’t the sole driver of the revisions to construction, there were also upward revisions due to incorporating late data and the new seasonal adjustment parameters.

Agriculture: Revisions to 2014 data are mainly due to new annual data feeding into crop and animal production, hunting and related service activities, supplied by the Department for Environment Food & Rural Affairs (DEFRA).

Key data changes to Expenditure components

Trade in goods: Revisions from Quarter 1 2014 mainly reflect revised data from HM Revenue & Customs (HMRC). Estimates of both exports and imports (table 5), in current prices (CP) and chained volume measures (CVM) and a summary of the revisions is presented in the table. Annually, the trade in goods deficit in 2014 was revised down by £2.1 billion. The new annual deficit is the largest goods deficit on record. The revision is due to more complete data being available.

Household Final Consumption Expenditure: Revisions are mainly due to the incorporation of new data from the Living Cost and Food Survey, the Department of Energy and Climate Change, HMRC and tourism data. The annual 2014 £m CVM figure for HHFCE has only seen a small upward revision, of £193 million, with the large £574 million downward revision to Quarter 1 2014. Revisions to classification of individual consumption by purpose (COICOP) data are widespread but include downward revisions to 05 Household goods and services and 09 Recreation and culture. In both instances new data cause the revisions. For all other quarters of 2014 revisions are upwards, the largest being a £425 million revision to Quarter 4 2014. Again, revisions are widespread but include upward revisions to 07 Transport and 12 Miscellaneous, partially offset by downward revisions to 09 Recreation and culture and 11 Restaurants and Hotels. Despite these quarterly revisions, the annual growth rate remains unrevised at 2.6%. In addition, housing saw further revisions to the current price measure of HHFCE on ‘Imputed Rental’ and ‘Actual Rental’. Revisions to the 2014 quarterly data are in order to maintain alignment of household implied deflators with the equivalent Consumer Price Inflation including owner occupiers’ housing costs (CPIH) but revisions over the year are minimal. A summary of the revisions to HHFCE is presented in table 6:

Gross Fixed Capital Formation: Revisions are seen for all periods from Quarter 1 2014 and for both current price (CP) and chained volume measures (CVM). A summary of the revisions to GFCF is presented in table 7.

There is a slight upward revision to GFCF CP series in 2014 which is reflected in part in the CVM data. There is an expectation of an additional upward revision to CVM due to the incorporation of the new construction price deflators. All quarters, in particular Quarter 1 2015, are also revised due to new data. Further analysis and explanation can be found in Changes to National Accounts: Gross fixed Capital Formation and Business Investment – Quarter 1 (January to March) 2015 published on 30 June 2015.

Key data changes to Income components

Compensation of Employees (CoE): Revisions to CoE (D.1) were downward in all open quarters and the annual downward revisions of £600 million to 2014 also impacted on the annual growth rate, which was revised down to 3.1%. Apart from Quarter 1 2014, revisions were mainly due to downward revisions in seasonally adjusted employers social contributions (D.12). Revisions to seasonally adjusted wages and salaries (D.11) occur due to changes in underlying data and subsequently, a reassessment of seasonal adjustment. A summary of the revisions to CoE is presented in table 8.

Revisions to the other income components were broad-based.

Detailed revisions for the three GDP approaches

• output revisions are shown in Annex E
• expenditure revisions are shown in Annex F
• income revisions are shown in Annex G

Sector accounts revisions, previously published 31 March 2015

• sector accounts revisions are shown in Annex H