GDP quarterly national accounts, UK: April to June 2024

• UK gross domestic product (GDP) is estimated to have grown by 0.5% in Quarter 2 (Apr to June) 2024, revised down from a first estimate increase of 0.6%.

• The quarterly path of real GDP at an aggregate level is largely unchanged from 2023 onwards, however, there have been downward revisions of 0.1 percentage points in Quarter 1 (Jan to Mar) 2023 and Quarter 2 2024.

• Following the preannounced revisions to growth in 2022, GDP for 2023 as a whole is estimated to have increased by 0.3%, revised up from the first estimate increase of 0.1% mainly because of updated data from the income approach to measuring GDP.

• In output terms, services grew by 0.6% in Quarter 2 2024 with widespread growth across the sector; this was partially offset by falls in both the production and construction sectors.

• Real households' disposable income (RHDI) is estimated to have grown by 1.3% in Quarter 2 2024, down from 1.6% in the previous quarter.

• The household saving ratio is estimated at 10.0% in the latest quarter, up from 8.9% in Quarter 1 2024.

UK real gross domestic product (GDP) is estimated to have grown by 0.5% in Quarter 2 (Apr to June) 2024, revised down from a first estimate increase of 0.6% (Figure 1). Compared with the same quarter a year ago, real GDP is estimated to have increased by 0.7% in Quarter 2 2024.

Looking at our more timely monthly estimates of GDP, it was recently estimated that the economy showed no growth in July 2024 as an increase in the services sector was offset by falls in production and construction.

In line with the National Accounts Revisions Policy, this release contains data that are consistent with the UK National Accounts, the Blue Book 2024, which will be released on 31 October 2024. Our Blue Book 2024: advanced aggregate estimates release showed the preannounced revisions to real GDP quarterly growth up to 2022. Today's release now includes revisions to 2023 onwards as a result of the Blue Book 2024 methodological changes, including improved source data and additional updated data, as would happen in all quarterly national accounts releases. This also includes new Value Added Tax (VAT) turnover data for Quarter 4 (Oct to Dec) 2023 and Quarter 1 (Jan to Mar) 2024.

In addition, we have also moved the base year from 2019 to 2022 to fully reflect the changes in the composition of the economy for the first time following the coronavirus (COVID-19) pandemic.

Based on these new data, we have also reviewed the balancing of the three approaches to measuring GDP from 2023 onwards.

The quarterly path of real GDP at an aggregate level is largely unchanged, however, there have been downward revisions of 0.1 percentage points in Quarter 1 2023 and Quarter 2 2024. There have also been some revisions to individual components for GDP. For more information, see Section 6: Revisions to GDP. An indicative monthly real GDP path consistent with these quarterly figures can be found in our associated dataset.

It is also important to note that early estimates of GDP are subject to revision (positive or negative). For more information please refer to our GDP revisions in Blue Book: 2023 article. In the past, the absolute average revision between the first quarterly GDP estimate and the same quarterly estimate three years later is 0.2 percentage points when more detailed information is available through the comprehensive annual supply and use balancing process. The GDP growth vintages are shown in Table 4.

As well as producing estimates of GDP, the Office for National Statistics (ONS) also produces estimates of GDP per head (or per capita), which divides UK GDP by the total UK population. This is one proxy indicator of welfare, rather than production. We are also exploring a more holistic view of national progress, prosperity and well-being.

As the UK population might not be changing at the same rate as GDP, this means that growth in GDP per head can show a different trend to growth in headline GDP.

Real GDP per head is estimated to have increased by 0.2% in Quarter 2 2024 and is 0.3% lower compared with the same quarter a year ago.

It is important to note that estimates of GDP per head up to 2022 are based on population estimates, whereas data from 2023 to 2024 are based on interim population projections.

Nominal GDP is estimated to have increased by 1.1% in Quarter 2 2024 (previously estimated as a 0.9% increase), mainly driven by increases in all main components. Compared with the same quarter a year ago, nominal GDP is estimated to have increased by 3.3%.

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. It is important to note that the GDP deflator covers the whole of the domestic economy, not just consumer spending, and also reflects the change in the relative price of exports to imports. For more information on the implied GDP deflator, see our Measuring price changes of the UK national accounts: February 2023 article.

The implied price of GDP rose by 0.6% in Quarter 2 2024, revised up from the first estimate increase of 0.3%. The upward revision mainly reflects revisions to the implied price of net trade.

Compared with the same quarter a year ago, the GDP implied deflator further eased to 2.6% in the year to Quarter 2 2024, revised up 0.4 percentage points (Figure 2).

The three approaches to measuring GDP

As explained in our previous GDP quarterly national accounts release, UK GDP was previously estimated to have increased by 0.1% in 2023, following growth of 4.3% in 2022. Our Blue Book 2024: advanced aggregate estimates release showed the preannounced revisions to real GDP quarterly growth up to 2022, where annual GDP in 2022 was now estimated to have increased by 4.8%.

Real annual GDP in 2023 is now estimated to have increased by 0.3%, revised up 0.2 percentage points from the previous estimate (Figure 3). This upward revision mainly reflects stronger data in the income approach to measuring GDP in particular, in compensation of employees and corporations' gross operating surplus.

While the three approaches to measuring GDP are now more closely aligned compared with the first estimate, there can still be uncertainty at the component level at this stage in the production cycle for 2023 onwards until these data have been confronted through the supply and use tables framework (SUTs). This uncertainty may be for various reasons and is further discussed in Section 11: Data sources and quality.

Output is estimated to have grown by 0.5% in Quarter 2 (Apr to June) 2024, revised down from the first estimate increase of 0.6%. This follows two unrevised consecutive quarterly falls of 0.1% in Quarter 3 (July to Sept) and 0.3% in Quarter 4 (Oct to Dec) 2023, and unrevised growth of 0.7% in Quarter 1 (Jan to Mar) 2024.

The growth in the latest quarter was driven by a 0.6% increase in services output while production and construction fell on the quarter. Across Quarter 2, early estimates suggest 13 out of 20 of the services, production and construction subsectors grew, down from 14 the previous quarter.

Services

Services output increased by 0.6% in Quarter 2 2024, revised down from the first estimate increase of 0.8%.

Figure 4 shows widespread growth in the services sector, with 10 out of 14 subsectors increasing in Quarter 2 2024, largely unchanged from the first estimate. The largest contributor to the growth in services output was a 2.9% increase in information and communication. Within this subsector, all six industries grew on the quarter, with the largest contribution from computer programming, consultancy and related activities.

Professional, scientific and technical activities increased by 1.9% and was the second largest positive contributor to the strength in services output. Within this subsector, scientific research and development is estimated to have increased by 11.4%, last higher in Quarter 2 2018.

Overall, non-consumer-facing services (business-facing services) grew by 0.9% in Quarter 2 2024, while consumer-facing services fell by 0.3% in Quarter 2 2024, following growth of 0.6% in Quarter 1 2024. The largest drivers of this fall were a 1.1% decline in buying and selling, renting and operating of own or leased real estate, excluding imputed rental, and a 1.7% fall in wholesale and retail trade; repair of motor vehicles and motorcycles.

Across 2023 and 2024, the services sector sees revisions for the following reasons:

• Value Added Tax (VAT) data for Quarter 4 2023 and Quarter 1 2024 have been incorporated for the first time
• late and updated Monthly Business Survey returns
• updated seasonal adjustment models
• the industry weights have also been updated and will affect the contribution of each industry to overall services growth; please see our gross value added industry weights time series dataset for the latest weights

Production

The production sector is estimated to have fallen by 0.3% in Quarter 2 2024, revised down from the previous estimated fall of 0.1%. Within production, manufacturing was the largest negative contributor, with 7 out of the 13 manufacturing subsectors showing falls in the latest quarter, shown in Figure 5.

Manufacturing output is estimated to have declined by 0.7% in Quarter 2 2024. The manufacture of transport equipment fell by 3.1% after six consecutive quarters of growth. Anecdotal evidence from the Society of Motor Manufacturers and Traders suggests that output has reduced while factories have been repurposing to prepare for increased electric car manufacturing, and also that temporary supply chain issues have restricted commercial vehicle production.

Across 2023 and 2024, the production sector sees revisions to growth mainly driven by manufacturing, and the mining and quarrying subsectors. Overall, the revisions to production reflect:

• new VAT turnover data for Quarter 4 2023 and Quarter 1 2024, and revisions to previous quarters
• late and updated Monthly Business Survey returns
• a review of seasonal adjustment models
• the industry weights have also been updated and will affect the contribution of each industry to overall production growth; please see our gross value added industry weights time series dataset for the latest weights, the largest impact of these changes in weights on production growth comes from mining and quarrying, where the industries' weight has increased

Construction

Construction output has fallen by 0.2% in Quarter 2 2024 (previously a 0.1% fall), the third consecutive quarterly fall, despite growth in May and June 2024. However, the rate of decline in construction is easing according to our early estimates, in line with anecdotal evidence provided by the Bank of England in their Agents' summary of business conditions. The level of construction output in Quarter 2 2024 was 0.8% lower than the same quarter a year ago.

The fall in construction in Quarter 2 2024 reflects a decline in new work of 0.4%, which fell for its sixth consecutive quarter. However, repair and maintenance increased for the 11th consecutive quarter, with growth of 0.1% in Quarter 2 2024.

Looking at the expenditure approach to measuring gross domestic product (GDP), there was an increase in gross capital formation, government consumption and household spending in Quarter 2 (Apr to June) 2024, partially offset by falls in net trade (Figure 6).

Within gross capital formation, the largest contribution was from acquisitions less disposals of valuables, which saw a change of £9.6 billion between Quarter 1 and Quarter 2 of 2024. This component is largely made up of non-monetary gold, which appears within net trade and so the effect is GDP neutral.

Figure 6 shows the previous and latest contributions to expenditure growth in Quarter 2 2024. These revisions to components are discussed in more detail in this section.

Household consumption

There was an increase of 0.2% in real household expenditure in Quarter 2 2024, unrevised from the first estimate. Within household consumption, the largest contributions to the growth were from transport, housing and miscellaneous.

Net tourism contributed negatively to growth in the latest quarter. Net tourism is offset within trade and therefore there is no impact on the GDP aggregate. Information on how we measure net tourism is provided in our National accounts article: treatment of tourism in the UK National Accounts. Excluding net tourism, domestic consumption increased by 0.4% in the latest quarter.

There have been notable revisions to household consumption across 2022 and the start of 2023. As explained in our Blue Book 2024: Advanced aggregate estimates article, estimates for 2022 have reconciled through the supply and use balancing process where this confrontation with the rest of the GDP dataset suggested that household expenditure was being underrecorded.

Additionally there have been revisions because of new and updated data from the International Passenger Survey.

Consumption of government goods and services

Real government consumption expenditure is now estimated to have grown by 1.1% in the latest quarter, revised down from the first estimate increase of 1.4%. The increase in government consumption in the latest quarter mainly reflects higher activity in public administration and defence, which more than offset a fall in health.

Over the course of 2023 and 2024, government consumption sees revisions mainly as a result of:

• updated data for a number of components, including our annual health benchmark data, where we capture more detailed information on services delivered by the NHS

• a review of seasonal adjustment models

Gross capital formation

Within gross capital formation, gross fixed capital formation (GFCF) is estimated to have increased by 0.6% in Quarter 2 2024, revised up from the first estimate increase of 0.4%. Growth was driven by increases in transport equipment, other buildings and structures, and intellectual property products.

Within gross fixed capital formation, business investment is estimated to have increased by 1.4% in Quarter 2 2024 (previously a 0.1% fall) (Figure 7).

Revisions in gross fixed capital formation and business investment partly reflect revised survey data, as well as updates to the seasonal adjustment model. In addition, balancing adjustments were applied to this component, in particular in Quarter 1 2024. 

Excluding the alignment and balancing adjustments, revised estimates show that inventories fell by £229 million in Quarter 2 2024 (Table 2), driven by lower stocks in wholesale and retail.

Net trade

The UK's trade deficit for goods and services was 2.3% of nominal GDP in Quarter 2 2024. However, this includes non-monetary gold, which is an erratic series so it can be useful to exclude this from the trade balance. Excluding non-monetary gold, the trade deficit was 1.4% of nominal GDP in Quarter 2 2024, revised up from a deficit of 1.9% (Figure 8).

Export volumes fell by 0.3% in the latest quarter, revised down from the previous estimate increase of 0.8%. The fall in the latest quarter was driven by a 2.8% fall in goods exports (previously a 2.6% fall), which offset a 1.8% increase in services (previously a 3.5% increase). The downward revisions in services exports were mainly because of updated International Trade in Services Survey (ITIS) data.

The increase in services exports was driven mainly by other business services, travel, telecommunications, and computers and information services.

The decline in goods exports was mainly driven by large movements in non-monetary gold, however, this series also appears within gross capital formation (GCF) as valuables and so the effect is GDP neutral. Elsewhere there were falls in material manufactures, and beverages and tobacco.

Import volumes increased by 6.3% in the latest quarter, revised down from the first estimate increase of 7.7%. Growth in the latest quarter was driven by increases of 9.1% in goods (previously a 9.9% increase) and 0.9% in services (previously a 4.1% increase). The downward revision in services imports was mainly because of updated International Trade in Services Survey (ITIS) data including quality improvement work.

The increase in goods imports was driven by large movements in non-monetary gold, as well as increases in machinery and transport equipment, and fuels.

The increase in services imports was mainly because of growth in other business services, in particular legal, accounting and management services, and advertising and market research services.

Nominal gross domestic product (GDP) increased by 1.1% in Quarter 2 (Apr to June) 2024, revised up from the first estimate increase of 0.9%. Growth in nominal GDP was driven by increases in all main components. Figure 9 shows that there have been some larger revisions to components in the latest quarter but also across 2023, which are discussed in more detail in this section.

Compensation of employees

Compensation of employees increased by 0.9% in Quarter 2 2024, revised up from the previous estimate of 0.3%. Growth in the latest quarter was driven by an increase of 1.4% in wages and salaries, which offset a 1.5% decline in employers' social contributions.

There continues to be more uncertainty around the wages and salaries figures in this release because of lower response rates in the Labour Force Survey. We have used additional information from our Pay As You Earn Real Time Information bulletin to help inform the estimates.

Revisions in compensation of employees, in particular across 2023, mainly reflect:

• new annual HM Revenue and Customs (HMRC) Pay As You Earn (PAYE) benchmark data for 2022 to 2023

• review of seasonal adjustment

• updated labour market indicators and other source data (replacing forecasts in the later period)

Taxes less subsidies

Revised estimates show that taxes less subsidies increased by 2.6% (previously a 1.4% fall) in Quarter 2 2024. Growth in the latest quarter was driven by a 1.9% increase in taxes (mainly Value Added Tax (VAT)) and a 3.6% decrease in subsidies.

The revisions in taxes less subsidies mainly reflects updated data on VAT.

Gross operating surplus of corporations

Total gross operating surplus (GOS) of corporations, excluding the alignment adjustment, fell by 0.2% (Table 3) with declines in non-financial corporations. Elsewhere within GOS, excluding balancing adjustments, financial corporations' GOS increased by 6.8% in the latest quarter mainly driven by growth in monetary financial institutions.

Upward revisions in GOS of corporations in 2023 mainly reflects new HMRC self-assessment data for 2021, which has updated the forecasts for 2022 onwards.

Within GOS of corporations, there is uncertainty around estimates of non-financial corporations as we do not have up-to-date quarterly information on the gross trading profits of businesses. These data are collected from HMRC and are available with a lag of approximately two years. As such, we rely on contextual data (as outlined in our Profitability of UK companies Quality and Methodology Information) from other sources to inform these quarterly estimates.

Early estimates of gross domestic product (GDP) are subject to revision (positive or negative). For more information please refer to our GDP revisions in Blue Book: 2023 article. In line with the National Accounts Revision Policy, all time periods in the dataset are open for revision.

Table 5 shows the revisions to quarter-on-quarter growth for the components of GDP. The revised estimates of average real GDP compared with the first estimate are shown in Figure 1, while the GDP growth vintages are shown in Table 4. Revision triangles for GDP and components are available alongside the Quarterly national accounts publication.

The revisions to quarter-on-quarter growth for the components of GDP are shown in Table 5. This release includes the processing of new and revised source data, including new Value Added Tax (VAT) data for Quarter 4 2023 and Quarter 1 2024, replacement of forecasts with actual survey or external source data, new seasonal adjustment factors, and a comprehensive review of GDP balancing.

Real households' disposable income (seasonally adjusted)

Real households' disposable income (RHDI) is estimated to have grown by 1.3% in Quarter 2 (Apr to June) 2024, a slowdown in growth from the 1.6% growth in the previous quarter (Figure 10).

Within RHDI, nominal gross disposable income saw growth at 1.6%, because of an increase in income from wages and salaries of £4.0 billion, an increase in households' social security benefits in cash of £1.8 billion and a fall in households' total social contributions paid of £1.8 billion. This was partially offset by an increase in other current taxes paid of £0.9 billion, which was driven by an increase in taxes paid to local government and an increase in the implied deflator of 0.4%.

Household saving ratio

The household saving ratio is estimated at 10.0% in Quarter 2 2024, up from 8.9% in Quarter 1 (Jan to Mar) 2024. The increase in the savings ratio was 1.1 percentage points in the latest quarter.

During Quarter 1 2024, non-pension saving contributed 5.4 percentage points to the saving ratio with pension saving contributing 4.6 percentage points (Figure 11). In the previous quarter both measures are showing identical contributions. This is the first time since the coronavirus (COVID-19) pandemic that non-pension saving has been higher than pension saving.

This was driven by a rise in income from wages and salaries of £4.0 billion, an increase in households' social security benefits in cash of £1.8 billion and a fall in households' total social contributions paid of £1.8 billion. Partially offsetting this was a rise in final consumption expenditure of £2.1 billion. The largest contributors to final consumption expenditure were transport, which increased by £1.9 billion, and housing, water, gas and electric, which increased by £0.9 billion. These were partially offset by the miscellaneous category, which decreased by £0.8 billion, and net expenditure by tourists, which decreased by £0.7 billion.

Non-financial account net lending and borrowing (seasonally adjusted)

In the non-financial accounts, non-financial corporations, general government, and non-profit institutions serving households were net borrowers as a percentage of GDP, while financial corporations, households, and the rest of the world were net lenders as a percentage of GDP.

The UK's borrowing position with the rest of the world as a percentage of GDP is estimated to have increased to 4.1% in Quarter 2 2024 compared with 2.3% of GDP in Quarter 1 2024.

Non-financial corporations switched to net borrowing of 3.4% of GDP, from net lending of 0.3% of GDP, in Quarter 1 2024. Within non-financial corporations, private non-financial corporations (PNFCs) switched to net borrowing of £24.1 billion from net lending of £0.7 billion in the previous quarter. This decrease was driven by a fall in net property income of £12.3 billion and an increase in gross capital formation of £12.5 billion.

Financial corporations increased their net lending position to 2.1% of GDP, from 1.1% of GDP in Quarter 1 2024. This was driven by a rise in net property income of £9.6 billion, partially offset by a rise in gross capital formation of £2.9 billion.

General government decreased net borrowing to 5.9% of GDP in Quarter 2 2024, from 6.1% of GDP in Quarter 1 2024. Within general government, central government increased net borrowing to £41.1 billion following £38.1 billion in the previous quarter. This increase was driven by decreased social contributions of £3.1 billion, increased consumption expenditure of £2.2 billion, and increased social benefits other than social transfers in kind of £1.4 billion. This was partially offset by a rise in taxes on production and imports less subsidies of £2.0 billion.

Households increased their net lending position to 3.4% of GDP, up from 2.7% of GDP in Quarter 1 2024. The drivers were the same as that of the saving ratio as mentioned previously.

Financial account net lending and borrowing (not seasonally adjusted)

In the financial accounts, non-financial corporations and general government were net borrowers as a percentage of GDP, while financial corporations, households, non-profit institutions serving households, and the rest of the world were net lenders as a percentage of GDP.

The UK's net borrowing position with the rest of the world as a percentage of GDP is estimated to have increased to 2.8% in Quarter 2 2024 compared with 0.4% of GDP in Quarter 1 2024.

Non-financial corporations have seen a fall in net borrowing as a percentage of GDP to 0.9% in the latest quarter, down from 1.9% in Quarter 1 2024. Within this sector, private non-financial corporations (PNFCs) decreased their net borrowing to £7.2 billion in Quarter 2 2024 from £14.2 billion in the previous quarter. This was driven by rises in net loans of £15.0 billion and increased currency and deposits of £8.4 billion, partially offset by decreased equity and investment fund shares and units of £13.9 billion.

Financial corporations are lending at 0.6% as a percentage of GDP in the latest quarter. Their financial account saw a rise in net loans of £40.5 billion, rise in net debt securities of £37.0 billion and a rise in derivatives and employees' stock options of £26.8 billion. This was partially offset by a fall in net currency and deposits of £73.3 billion, a fall in equity and investment fund shares and units of £23.0 billion and a fall in net other accounts of £6.4 billion.

General government increased their net borrowing as a percentage of GDP to an estimated 8.0% in the latest quarter, from 2.2% in Quarter 1 2024. This increase was driven by a rise in long-term debt securities issued by UK central government of £39.5 billion, partially offset by a rise in net currency and deposits of £0.8 billion and a rise in other accounts receivable or payable of £10.5 billion.

Households increased their net lending as a percentage of GDP in the latest quarter at an estimated 5.4%, from 3.6% in Quarter 1 2024. This was driven by a rise in net currency and deposits of £9.3 billion and net other accounts receivable or payable of £8.9 billion, partially offset by a rise in loans secured on dwellings of £8.2 billion.

Non-financial sector accounts revisions in 2023 against previously published

UK net borrowing from the rest of the world as a percentage of GDP was revised down from 3.5% to 2.2% in 2023. This revision was driven by an upward revision to final consumption expenditure of £49.9 billion. This was partially offset by upward revisions to net property income of £16.6 billion, gross mixed income of £10.3 billion and compensation of employees of £9.1 billion.

Non-financial corporations' net borrowing as a percentage of GDP was revised down from 1.1% to 0.3% in 2023. This revision was driven by upward revisions to gross operating surplus of £8.9 billion and to net property income of £3.0 billion, together with a downward revision to gross capital formation of £6.5 billion.

Financial corporations' net lending as a percentage of GDP was revised up from 1.9% to 2.5% in 2023. This revision was driven by upward revisions to net property income of £21.6 billion.

General government net borrowing as a percentage of GDP was revised down from 5.9% to 5.7% in 2023. Small revisions across the accounts were experienced.

Households' net lending as a percentage of GDP was revised down from 2.7% to 1.4% in 2023. This revision was primarily driven by the upward revision to final consumption expenditure of £40.7 billion, and a downward revision of property income of £9.2 billion, partially offset by upward revisions to gross mixed income of £10.3 billion and compensation of employees of £9.1 billion.

The three approaches to measuring GDP

The different data content and quality of the three approaches: the output approach, the expenditure approach and the income approach, dictate 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. 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.

The three approaches to measuring GDP allow us to confront our data sources within the national accounts framework. Figure 3 showed that while the three approaches to measuring GDP are now more closely aligned compared with the first estimate, there can still be uncertainty at the component level at this stage in the production cycle for 2023 onwards until these data have been confronted through the supply and use tables framework (SUTs). This uncertainty may be for various reasons and is further discussed in this section.

Output approach

In the output approach, we do not currently have final estimates for intermediate consumption (value of goods and services purchased to be used up in the production of goods and services) as outlined in our Impact of Blue Book 2023 changes on gross domestic product article. Initially, we use turnover and output as a proxy for changes in gross value added and assume that the intermediate consumption ratio by industry, calculated in 2022, holds constant into 2023 onwards. More information on this is provided later in this section.

Expenditure approach

In the expenditure approach, we currently have lower response rates for areas such as the Living Costs and Food Survey, which underpin our estimates of household consumption. We therefore rely on additional real time indicators to inform some of our estimates in the short run.

Income approach

In the income approach, we do not have up-to-date quarterly information on the gross trading profits of businesses as these data are collected from HM Revenue and Customs and are available with a lag of approximately two years. We rely on contextual data (as outlined in our Profitability of UK companies Quality and Methodology Information) from other sources to inform these quarterly estimates. There is currently more uncertainty around the compensation of employees figures in this release because of lower response rates in the Labour Force Survey. We have used additional information from our Pay As You Earn Real Time Information bulletin to help inform the estimates.

Reaching the GDP balance

Quarterly GDP is a balanced measure of the three approaches, while the GDP monthly estimate focuses on gross value added (GVA) and output as a proxy for GDP. This results in data differences (in both levels and growths terms) between the quarterly publications (average GDP) and the GDP monthly estimate (output approach to GDP). Quarterly GDP is the lead measure of GDP because of its higher data content and inclusion of variables, which enable the conversion from a GVA concept to a GDP basis.

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 our GDP quarterly data tables, have a target limit of plus or minus £3,000 million on any quarter. However, in periods where the data sources are particularly difficult to balance, larger alignment adjustments are sometimes needed, as explained in our Recent challenges of balancing the three approaches of GDP article. Our standard practice is to prefer that the alignment adjustment be out of tolerance rather than over-adjust individual GDP components to achieve a balance. This is most likely to occur in the latest quarter where the constraints are larger, where we must align to the output estimate for the change in GDP, and where the data content is at its lowest.

To achieve a balanced GDP dataset through alignment, balancing adjustments are applied to the components of GDP where data content is particularly weak in a given quarter because of a higher level of forecast content. The balancing adjustments applied in this estimate are shown in Table 8. The resulting series should be considered accordingly.

The relationship between intermediate consumption ratios and gross value added by industry

For most industries, our early estimates of gross value added (GVA) use real growth in turnover or volume of output as a proxy for GVA growth. The main assumption this proxy approach makes is that the relationship between output and intermediate consumption remains the same past the last fully balanced year. Therefore, the extent to which this proves not to be the case is one cause of revision between our early estimates of GVA and the fully balanced annual estimates. This relationship can be represented by the intermediate consumption ratio or IC ratio. This is the intermediate consumption of an industry divided by its output.

Consider GVA estimates for 2022 as an example. When the 2023 annual national accounts were published, the last balanced year was 2021. Since then, 2022 GVA estimates were based on the 2021 IC ratio. As part of the 2024 annual national accounts round, we observe the 2022 IC ratio for the first time. We effectively replace a forecast of the 2022 IC ratio (using 2021) with the observed 2022 IC ratio. 

If the observed IC ratio of an industry is higher, it requires more product inputs to create the same amount of output, and hence GVA (other things equal) will be lower. We therefore expect an increase in the IC ratio of an industry to be associated with a downward revision in GVA growth. Similarly, a lower IC ratio in the most recent year would be associated with an increase in the GVA growth rate. 

The IC ratio is not the only influence on GVA. If both output and intermediate consumption increase such that the IC ratio is preserved, then GVA increases without the IC ratio changing at all. For this reason, the strength of the association between the IC ratio change and the GVA revision gives an indication of how important this factor was in determining the GVA growth rate revision. 

Figure 12 shows this association for 19 Standard Industrial Classification (SIC) section-level industries for the years 2020 to 2022. Industry T (activities of households as employers) is excluded because this industry by definition has no intermediate consumption. The 2022 IC ratio is the position pre-rebasing. Rebasing led to an overall upward shift in the volume IC ratio in all years, which prevents a like-with-like comparison.

Figure 12: The changes in IC ratio and GVA revision by industry were more weakly associated in 2022 than 2020 or 2021

Figure 12 shows a relatively strong association between the change in the IC ratio and the change in GVA growth in 2020 and 2021. There was a relatively wide range of IC ratio changes in these years, which covered the initial impact of the coronavirus (COVID-19) pandemic in 2020 and the beginning of the recovery in 2021. This disruption led to the ONS suspending rebasing in these years, as discussed in our recent Blue Book 2024: advanced aggregate estimates article. 

Taking health and social care (SIC Section Q) as an example, the 2020 IC ratio proved to be much higher than in 2019; intermediate consumption grew much more than output did as health services adapted to the coronavirus pandemic. When the IC ratio was updated, volume GVA fell. This effect was somewhat reversed in 2021; health spending growth was lower than activity growth, so the IC ratio fell and GVA was revised upwards. 

The association in 2022 between the change in IC ratio and the revision to GVA growth was much weaker. For example, there were more cases where the IC ratio and the GVA revision move in the same direction in 2022 than 2021 or 2020. For professional and business services (SIC Section M) we see an increase in both the IC ratio and GVA. In this case, this mainly reflects higher overall activity in 2022 in this industry in the annual data compared with the short-term data.

2022 does see two outliers that both fit the expected relationship. The electricity and gas supply industry (SIC Section D) has a larger increase in the IC ratio and a downward revision to GDP growth, and the transportation and storage industry (SIC Section H) sees the same but in reverse. The energy and transport industries were both reworked in 2024 and are discussed in our recent Blue Book 2024: advanced aggregate estimates article.

In conclusion, in 2020 and 2021, the structural annual surveys and subsequent annual data reconciliation had a large impact on the relationship between output and intermediate consumption; these years also saw relatively large revisions to GVA by industry. In 2022, the changes to the IC ratio are more modest; revisions overall have been smaller, and data on intermediate consumption seems to have played much less of a role in determining them. 

Net trade

HM Revenue and Customs (HMRC) implemented a data collection change affecting data on goods exports from Great Britain (GB) to the EU in January 2021, and data on goods imports from the EU to GB in January 2022. For more information see HMRC's Methodology changes to trade in goods statistics from March 2022 article.

We have applied adjustments to our estimates of goods imports from the EU for 2021 to reflect this data collection change, which brought imports and exports statistics onto a like-for-like basis in 2021, as detailed in our Trade in goods: Adjustments to 2021 EU imports estimates, by chapter dataset. The full time series for goods imports from and exports to the EU contains a discontinuity from January 2021 resulting from the move from Intrastat to customs declarations, as detailed in our Impact of trade in goods data collection changes on UK trade statistics: adjustments to 2021 EU imports estimates article. We are continuing to work with HMRC to consider possible options to account for this discontinuity.

Separately, in 2021, the use of Staged Customs Controls (SCC) allowed customs declarations to be reported up to 175 days after the date of import for imports of non-controlled goods from the EU to GB. The UK government introduced full customs controls in January 2022, while July 2022 marked the first full month of data where delayed customs declarations submitted under SCC could not be included. Temporary arrangements still apply for imports of goods from Ireland to GB. In our Impact of trade in goods data collection changes on UK trade statistics: further update on Staged Customs Controls article published on 3 July 2023, we presented analysis on the impact of SCC on trade in goods data for imports from the EU to GB in 2022. We have previously adjusted for the impact of SCC and have published an article Impact of trade in goods data collection changes on UK trade statistics: adjustments to 2022 EU imports estimates providing a detailed breakdown of the impact of these adjustments.

Strengths and limitations

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. Further information on measuring gross domestic product (GDP) can be found in the Guide to the UK National Accounts, and more quality and methodology information (QMI) is available in the Gross domestic product (GDP) Quality and Methodology Information.

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 often 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.

Accredited official statistics

These accredited official statistics were independently reviewed by the Office for Statistics Regulation in October 2016. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics and should be labelled "accredited official statistics".