UK gross domestic product (GDP) is estimated to have increased by an unrevised 0.2% in Quarter 2 (Apr to June) 2023.
UK GDP is now estimated to have increased by 0.3% in Quarter 1 (Jan to Mar) 2023, revised up from a previous estimate of 0.1%, while growth across all quarters of 2022 is unrevised.
In output terms, growth in the latest quarter was driven by a 1.2% increase in the production sector, where there were increases in 9 out of the 13 sub-sectors; this reflects falling input prices across the quarter relieving some pressure on manufacturers.
The household saving ratio grew by 9.1% in the latest quarter, up from 7.9% in Quarter 1 2023, with income (driven by a rise in social benefits together with increased wages and salaries) growing more than expenditure.
Real households' disposable income (RHDI) grew by 1.2% in Quarter 2 (Apr to June) 2023 following no change in the previous quarter.
UK gross domestic product (GDP) is estimated to have increased by an unrevised 0.2% in Quarter 2 (Apr to June) 2023. This follows upwardly revised growth of 0.3% in the previous quarter (previously 0.1%). Figure 1 shows there have been minimal revisions to GDP from 2022 onwards, with only one of the six recent quarters revised.
In line with the National Accounts Revisions Policy, this release contains data that are consistent with the UK National Accounts, the Blue Book 2023, which will be released on 31 October 2023. We preannounced the revisions to estimates up to 2021 in our article on 1 September. As noted previously, these revisions were larger than normal, reflecting the larger movements in GDP and the practical challenges of estimating GDP throughout the coronavirus (COVID-19) pandemic.
This release now includes revisions to 2022 and 2023 as a result of the Blue Book 2023 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) 2022 and Quarter 1 (Jan to Mar) 2023. Based on these new data, we have also reviewed the balancing of the three approaches to measuring GDP from 2022 onwards.
While the quarterly path of real GDP at an aggregate level is unrevised across all of 2022 and Quarter 2 2023, there have 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.
Early estimates of GDP are subject to revision (positive or negative). For more information, please refer to our Communicating the UK economic cycle methodology.
The coronation of King Charles III on 6 May 2023 led to an additional bank holiday on Monday 8 May. As this was a one-off event, the impact does not get removed from our seasonally adjusted estimates. This should be considered when interpreting the seasonally adjusted movements involving May and June 2023, and to a lesser extent, the Quarter 2 2023 estimates.
UK GDP is now estimated to have increased by 4.3% in 2022, revised from a first estimate of 4.1%. As announced in our previous Impact of Blue Book 2023 changes on gross domestic product article on 1 September 2023, annual volume GDP growth in 2021 is revised up 1.1 percentage points to an 8.7% increase; this follows a revised 10.4% fall in 2020 (previously an 11.0% fall).
Taking into account all our recent revisions, this means that GDP is now estimated to be 1.8% above pre-coronavirus (COVID-19) pandemic levels in Quarter 2 (Apr to June) 2023.
Nominal GDP is estimated to have increased by 2.5% in Quarter 2 2023, revised up from a previous estimate of 2.3%.
|% growth [note 1]|
|Chained volume measures||Current market prices|
|GDP||GDP per head|
Download this table Table 1: Headline national accounts indicators for the UK.xls .csv
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 a revised 2.4% in Quarter 2 2023 (previously 2.1%), which was primarily driven by higher price pressures for household consumption and government consumption.
Revisions to the implied deflator, particularly in Quarter 1 and 2 2023, are driven by upward revisions in the implied price for government consumption, household consumption and gross capital formation.
Compared with the same quarter a year ago, there was a 7.9% increase in the GDP implied deflator, revised from a first estimate of 6.7% (Figure 2). In the year to Quarter 2 2023, growth has been driven by strong rises in the price of household consumption, though there was a slowing in how much these prices increased. There have also been large price movements in internationally traded goods and services, where there was an easing in the implied price of imports; this contributes positively to the increase in the GDP implied deflator. Further information on the price movements of trade is discussed in our Purchasing power of GDP, UK: 2022 article.
More about economy, business and jobs
In Quarter 2 (Apr to June) 2023, output is estimated to have increased by 0.2% (unrevised from the first estimate). The services sector is now estimated to show no growth in the second quarter of 2023, revised down from a first estimate of 0.1%. The production sector is now estimated to have increased by 1.2%, revised up from a first estimate of 0.7%. Elsewhere construction output is unrevised from a first estimate increase of 0.3%.
Services output is now estimated to show no growth in the latest quarter, revised down from a first estimate increase of 0.1%. Figure 3 shows that there was a mixed performance for the service sub-sectors in the first quarter, with growth in 8 out of the 14 sub-sectors partially offset by falls in the other 6. This position is largely unchanged from the first estimate.
Overall, consumer-facing services grew by 0.9% in Quarter 2 2023, revised up from growth of 0.8% in our first estimate.
The largest positive contribution to growth was from the information and communication sub-sector, which grew by 0.9%. The biggest increases were in motion picture, video and TV programme production, and computer programming, consultancy and related activities. The next largest positive contribution to growth was from accommodation and food service activities, which increased by 2.1%. This was driven by food and beverage services, which saw a particularly strong month in June. Anecdotal evidence from the Monthly Business Survey suggested that good weather and an increase in live events boosted turnover for businesses.
The largest negative contribution to growth was from the professional, scientific and technical activities subsector, which fell by 1.3%, with declines in scientific research and development, architectural and engineering activities, and advertising and market research.
Across 2022 and 2023, the services sector sees revisions to growth mainly driven by the government and other services sub-sector (Figure 4). Overall, the revisions to services mainly reflect human health and social work activities, education, and business services and finances.
Human health and social work activities (within government services) saw revisions over the course of 2021, as explained in our Impact of Blue Book 2023 changes on gross domestic product article. We have reflected more timely information on the inputs as part of producing the output of human health and social work activities, which are now being used to construct estimates of gross value added for 2022 and 2023.
Education (within government services) has been updated with estimates on school attendance. For further information please, refer to the Consumption of government goods and services sub-section in Section 4: Expenditure.
Business services and finances revisions are caused by deflator improvements introduced as part of Blue Book 2023. For more information, see the GDP monthly estimate sub-section within Section 11: Measuring the data. This sub-sector also sees revisions because of revised and new Value Added Tax (VAT) data, and a review of seasonal adjustment.
Production output increased by 1.2% in Quarter 2 2023, revised up from a first estimate increase of 0.7%. This follows unrevised growth of 0.1% in the previous quarter.
The increase in production output in the latest quarter was mainly driven by an increase of 1.9% in manufacturing. There were increases in 9 out of the 13 sub-sectors, which may reflect falling input prices across the quarter relieving some pressure on manufacturers.
The largest positive contribution was from the manufacture of transport equipment (Figure 5), in particular the manufacture of motor vehicles, trailers and semi-trailers, which performed strongly in April and June 2023. Anecdotal evidence from the Society of Motor Manufacturers and Traders (SMMT) reported a 16.2% increase in car manufacturing in June 2023 compared with the same month a year ago.
Figure 5 shows the contributions to manufacturing growth is largely unchanged from the first estimate.
Across 2022 and 2023, the production sector sees revisions to growth mainly driven by manufacturing and the mining and quarrying sub-sectors (Figure 6). Overall, the revisions to production reflect:
revised volume data from the Department for Energy Security and Net Zero (DESNZ) for mining and quarrying
new VAT turnover data for Quarter 4 (Oct to Dec) 2022 and Quarter 1 (Jan to Mar) 2023, and revisions to previous quarters
a review of seasonal adjustment models
Construction output rose by 0.3% in Quarter 2 2023, unrevised from the first estimate. This follows revised growth of 0.6% (previously 0.4%) in Quarter 1 2023. The growth in Quarter 2 2023 was driven by repair and maintenance, which grew by 1.8%. This growth was partially offset by a fall of 0.7% in new work.Nôl i'r tabl cynnwys
There was an increase in household consumption in Quarter 2 (Apr to June) 2023, while there was also higher government spending on the quarter. This was partially offset by a decrease in the volume of net trade in Quarter 2 2023.
Figure 7 shows the previous and latest contributions to expenditure in Quarter 2 2023. The impact of revisions on real gross domestic expenditure over this quarter have been minimal. These revisions to components are discussed in more detail.
There was a 0.5% increase in real household expenditure in Quarter 2 2023, revised down from a first estimate increase of 0.7%. This follows upwardly revised growth in the previous quarter of 0.7%; previously, this showed no growth. Within household consumption, the largest contributions to growth in the latest quarter were from spending on housing, water, electricity and gas, transport, and recreation and culture.
Figure 8 shows there have been notable revisions to household consumption across 2022 and 2023. These revisions include updated data on transport, health, recreation and culture, and restaurants and hotels.
Net tourism is a significant driver of the revisions in household consumption, including the revision to Quarter 1 (Jan to Mar) 2023. These revisions reflect:
revised and updated data from the International Passenger Survey, particularly for Quarter 4 (Oct to Dec) 2022 and Quarter 1 2023
new Blue Book 2023 methodology introduced for measuring travel exports
new Blue Book 2023 data deflator changes, which better reflect changing prices in travel exports and import
While household consumption sees large revisions because of net tourism, these are offset within trade, and there is therefore no impact on the GDP aggregate.
Consumption of government goods and services
Real government consumption expenditure increased by 2.5% in Quarter 2 2023, revised down from a first estimate increase of 3.1%. Growth in the latest quarter is mainly reflecting higher spending on public administration and defence. There was also pick-up in the final consumption expenditure of health, which saw higher than normal growth for this time of year, despite industrial action.
Nominal government consumption expenditure increased by 5.9% in Quarter 2 2023, driven by increased spending on health, and on public administration and defence. The increase in health spending is primarily reflected in higher wages and salaries, reflecting the NHS pay settlement. For further details, please see GOV.UK’s press release, Government and health unions agree pay deal paving way for an end to strike action. However, these expenditure data are based on early outturn data and budgetary plans, and may be subject to revision when firmer data become available.
Over the course of 2022 and 2023, government consumption sees revisions mainly as a result of:
new Blue Book 2023 methodology introduced to better measure adult social care
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
updated estimates of final consumption expenditure of education where pupil absenteeism from Quarter 2 2020 had been overestimated (which had resulted in lower estimates of school attendance); figures have been updated from Quarter 1 2022 onwards, and we will update estimates for Quarter 2 2020 to Quarter 4 2021 when the revision policy next allows, as a result, there is a small step change between Quarter 4 2021 and Quarter 1 2022
Gross capital formation
Gross fixed capital formation (GFCF) is now estimated to have increased by 0.8% in the latest quarter, revised up from a first estimate of no growth. This follows a rise of 2.5% in Quarter 1 2023.
There was a 4.1% increase in business investment on the quarter, revised up from a first estimate increase of 3.4%. Growth in business investment was driven by increased transport investment, in particular on aircraft, which saw an increase in imports from the United States in April 2023 as shown by our UK trade: April 2023 bulletin. Elsewhere, investment in information and communication technology (ICT) equipment and other machinery equipment declined on the quarter, following strong growth in Quarter 1 2023. This brought investment forward in response to the super-deduction allowance expiring on 31 March 2023.
Figure 9 shows that there have been some revisions to the path to business investment, particularly in 2022. This reflects revised aircraft data, new Blue Book 2023 methodology with the introduction of the computer hardware deflator, as well as updates to the seasonal adjustment model.
Excluding the alignment and balancing adjustments, estimates show that inventories fell by £3.2 billion in Quarter 2 2023, revised down from a fall of £2.0 billion in the first estimate.
|Q1 2022||Current price||9891||-3137||500||12528|
|Q1 2022||Chained volume measure||9177||-2898||-500||12575|
|Q2 2022||Current price||11807||3240||700||7867|
|Q2 2022||Chained volume measure||8155||2984||-600||5771|
|Q3 2022||Current price||1768||-2192||-250||4210|
|Q3 2022||Chained volume measure||-2928||-1947||-100||-881|
|Q4 2022||Current price||2436||2089||200||147|
|Q4 2022||Chained volume measure||2781||1861||1400||-480|
|Q1 2023||Current price||-479||1172||-800||-851|
|Q1 2023||Chained volume measure||-742||1025||-1767|
|Q2 2023||Current price||-1521||753||-300||-1974|
|Q2 2023||Chained volume measure||-2024||642||500||-3166|
Download this table Table 2: Change in inventories, including and excluding balancing and alignment adjustments.xls .csv
HM Revenue and Customs (HMRC) implemented a data collection change, affecting data on goods exports from Great Britain to the EU in January 2021, and data on goods imports from the EU to Great Britain 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. This 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 data 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. More information is available 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 Great Britain. 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 Great Britain.
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 Great Britain in 2022. To account for the impact of SCC, we have now applied an adjustment to our estimates of goods imports from the EU for the period January to June 2022, which has contributed to downward revisions of trade imports for this period. Revised estimates will also be published in our UK trade: August 2023 bulletin on 12 October 2023. We will also be publishing an Impact of trade in goods data collection changes on UK trade statistics: adjustments to 2022 EU imports estimates article, providing a detailed breakdown of the impact of these adjustments.
The UK's trade deficit for goods and services was 1.5% of nominal gross domestic product (GDP) in Quarter 2 2023, revised up from a first estimate deficit of 2.4%. However, there have been large movements in non-monetary gold over the last quarter, which can be volatile. Excluding non-monetary gold, the trade deficit was 1.9% of nominal GDP in Quarter 2 2023, revised up from a first estimate deficit of 2.9% (Figure 10).
Export volumes fell by 0.9% in the latest quarter, revised up from a first estimate fall of 2.5%. The fall in the latest quarter was driven by an unrevised fall of 0.8% in goods exports, as well as a revised 1.0% fall in services exports (previously estimated as a 4.0% fall).
The fall in goods exports was mainly driven by large movements in non-monetary gold. However, this data series also appears within gross capital formation (GCF) as valuables, so the effect is GDP neutral. Revisions to goods exports mainly reflects new Blue Book 2023 methodology to improve measurement of globalisation. Further information on this improvement is discussed in our Globalisation in the context of the UK National Accounts: Blue Book 2023 article.
The fall in services exports was driven mainly by other business services, with decreases in advertising and market research, management consulting, and other trade in services. Services exports see upward revisions throughout 2022 and 2023, mainly reflecting updated estimates of transportation and travel services. This is where we have new information from the International Passenger Survey, as well as new Blue Book 2023 data deflator changes, which better reflect changing prices in travel exports and imports.
Import volumes increased by a revised 2.2% in the latest quarter (previously estimated as a 1.0% increase). Growth in the latest quarter was driven by a 1.5% increase in goods imports (revised down from a first estimate increase of 1.8%) and 3.7% increase in services imports (revised up from a first estimate fall of 0.4%).
Revisions to goods imports reflect adjustments made as discussed in our Staged Customs Controls article for Quarter 1 and 2 2022, as well as improvements to the measurement of globalisation.
Revisions to services imports reflect revised International trade in services data, with new information on management consulting and advertising, market research and public opinion polling services. Services imports are also impacted by new Blue Book 2023 methodology for better estimating travel services.Nôl i'r tabl cynnwys
Nominal gross domestic product (GDP) rose by 2.5% in Quarter 2 (Apr to June) 2023, revised up from a previous estimate of 2.3%. The quarterly rise was driven by growth in compensation of employees and taxes less subsidies.
Figure 11 shows the previous and latest contributions to nominal GDP for Quarter 2 2023. The impact of revisions on nominal gross domestic income over this period has been minimal, although there have been larger revisions to income components.
Compensation of employees increased by 2.0% in Quarter 2 2023 (previously estimated to be 1.9%), driven by a rise in wages and salaries of 2.2%, and a 1.0% in employers’ social contributions. Early estimates suggest that the strong increase in wages and salaries reflects rises in public sector earnings, particularly hospital wages and salaries, partly reflecting the non-consolidated payments in the NHS.
Early estimates show that taxes less subsidies increased by 23.7% in Quarter 2 2023, driven by a large decrease in subsidies because of the lower payments as part of the Energy Price Guarantee scheme and the Energy Bill Relief Scheme. In October 2022, the Office for National Statistics (ONS) announced that the Energy Price Guarantee scheme had been classified as a subsidy on products from central government to energy suppliers in the non-financial corporations sector in the UK. For more information, see our Energy Price Guarantee classification review.
The equivalent support scheme for businesses and non-domestic customers was announced as the Energy Bill Relief Scheme. This scheme provided a discount on gas and electricity unit prices, and the UK government will compensate the suppliers for this reduction. In October 2022, the ONS announced that the scheme had also been classified as a subsidy on products from central government to energy suppliers in the non-financial corporations sector in the UK. For more information, see our Energy Bill Relief Scheme classification review. Data for Quarter 2 2023 are an initial indicative estimate, which will be revised over the coming months as firmer data become available.
Total gross operating surplus (GOS) of corporations excluding the alignment adjustment fell by 4.5% (Table 3), reflecting lower subsidies paid out as part of the Energy Price Guarantee scheme. There continues to be increased uncertainty around the full impacts of this scheme, which has been reflected in a larger than normal alignment adjustment in Quarter 1 (Jan to Mar) 2023 and Quarter 2 2023 (Table 3). More detail can be found in Section 11: Measuring the data. Data content for this component is low at this stage in the GDP publication model.
Download this table Table 3: Gross operating surplus of corporations, including and excluding alignment adjustments.xls .csv
In line with the National Accounts Revisions Policy, all time periods in the dataset are open for revision.
Table 4 shows the revisions to quarter-on-quarter growth for the components of GDP.
|Q1 2022||Q2 2022||Q3 2022||Q4 2022||Q1 2023||Q2 2023|
in current prices
|Taxes on products|
& production less
Download this table Table 4: Revisions to quarter-on-quarter growth for components of GDP.xls .csv
Estimates published for the first time today, 29 September 2023, are consistent with several methodological improvements to the institutional sector accounts introduced as part of our annual improvement programme; we discussed indicative impacts of changes to the main financial and non-financial accounts estimates in our Detailed assessment of changes to institutional sector accounts: 1997 to 2021 article.
Household saving ratio
The household saving ratio is 9.1% in Quarter 2 (Apr to June) 2023, up from 7.9% in Quarter 1 (Jan to Mar) 2023. This upward movement was driven by a rise in social benefits other than transfers in kind of £10.2 billion, together with increased wages and salaries of £6.0 billion.
Social benefits was itself driven by increased benefits in line with inflation. Wages and salaries’ biggest contributor to growth was the increases in public sector pay. This was partially offset by households’ expenditure, which increased by 2.0% in the latest quarter, slower growth than in Quarter 1 2023 where growth was 2.3%.
Real households’ disposable income (seasonally adjusted)
Real households' disposable income (RHDI) grew by 1.2% following no change in Quarter 1 (Jan to Mar) 2023. Within RHDI, nominal gross disposable income saw growth at 2.7% driven by increased income as described in the previous section on the households saving ratio. This was offset by growth in the implied deflator of 1.5% as households experienced price increases in several spending categories, including restaurants and hotels, food, and transport.
Non-financial account net lending and borrowing (seasonally adjusted)
The UK’s borrowing position with the rest of the world as a percentage of gross domestic product (GDP) increased to 3.9% in Quarter 2 2023 compared with 2.4% of GDP in Quarter 1 2023.
Financial corporations increased their net lending position to 2.8% of GDP, from 2.3% of GDP in Quarter 1 2023. This was driven by a rise in other capital transfers receivable of £5.6 billion, together with a rise in net property income of £3.1 billion, driven by increased net interest at £5.8 billion, partially offset by an increase in other investment income payable on pension entitlements of £3.4 billion.
Non-financial corporations decreased their net lending to 0.4% of GDP in Quarter 2 2023, from 2.8% of GDP in Quarter 1 2023. Within non-financial corporations, private non-financial corporations (PNFCs) had a net lending position of £2.3 billion, down from £17.4 billion in the previous quarter. This decrease was driven by a £9.7 billion decrease in net reinvested income on foreign direct investment driven by falling dividends. Gross operating surplus also decreased by £3.0 billion as a result of updated source data and methodology changes.
Households increased their net lending position to 2.4% of GDP in Quarter 2 2023 compared with 1.5% of GDP in Quarter 1 2023. This was driven by greater increases in income than expenditure as described in the previous section on the saving ratio.
General government increased net borrowing to 7.3% of GDP in Quarter 2 2023, from 7.1% of GDP in Quarter 1 2023. Within general government, central government increased net borrowing by £5.3 billion. This increase was driven by a decrease in net social contributions of £9.9 billion together with an increase in final consumption expenditure of £7.3 billion, partially offset by rises in taxes on production and imports less subsidies of £14 billion.
Financial account net lending and borrowing (not seasonally adjusted)
Households saw an increase in their net lending as a percentage of GDP in the latest quarter at 3.0%, from 1.4% in Quarter 1 2023. Within their financial account, households saw increases in deposits with UK monetary financial institutions of £16.1 billion together with a rise in equity and investment funds shares and units of £3.0 billion, partially offset by decreases in net loans. Households continue to have negative net secured lending of negative £1.8 billion with the previous quarter at negative £4.9 billion. This is caused by household repayments outstripping new lending, driven by lending from banks and building societies.
Financial corporations increased their net lending as a percentage of GDP to 2.3% in the latest quarter, following lending of 0.2% in Quarter 1 2023. This was driven by a rise in equity and investment fund shares and units of £72.7 billion and a rise in derivatives and employee stock options of £16.2 billion. This was partially offset by a fall in net currency and deposits of £66.3 billion.
Non-financial corporations switched to a net lending as a percentage of GDP of 1.7% in the latest quarter, following net borrowing of 0.2% in Quarter 1 2023. Within this sector, private non-financial corporations (PNFCs) switched to net lending as a percentage of GDP of 1.5% following borrowing of 0.2% in Quarter 2 2023. This was driven by increased currency and deposits of £17.4 billion together with increased net loans at £14.2 billion, partially offset by fall in net equity and investment fund shares and units of £27.5 billion.
General government increased their net borrowing as a percentage of GDP to 9.7% in the latest quarter, from 2.7% in Quarter 1 2023. This rise was driven by a fall in net debt securities of £67.4 billion, offset by increased deposits at £21.4 billion.Nôl i'r tabl cynnwys
Gross Domestic Product (GDP)
|Quarter on previous quarter (%)||Quarter on|
(%), Q2 2023
Download this table Table 5: Real GDP growth for the G7 economies.xls .csv
GDP – data tables
Dataset | Released 29 September 2023
Annual and quarterly data for UK gross domestic product (GDP) estimates, in chained volume measures and current market prices.
GDP in chained volume measures – real-time database (ABMI)
Dataset | Released 29 September 2023
Quarterly levels for UK gross domestic product (GDP), in chained volume measures at market prices.
GDP at current prices – real-time database (YBHA)
Dataset | Released 29 September 2023
Quarterly levels for UK gross domestic product (GDP) at current market prices.
Reaching the GDP balance
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 gross domestic product (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.
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 first quarterly estimate 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.
In this quarter, the alignment adjustment, used to align income to average GDP, is larger than normal (Table 3), reflecting the current challenges and uncertainties within the income approaches, in particular on the measurement of the Energy Price Guarantee scheme and the Energy Bill Relief Scheme within the accounts, although the size of this alignment adjustment has halved since the first estimate, reflecting upward revisions across income components. Work will continue with a focus on the income approaches to GDP, and we will continue to review this over the coming months as and when more information becomes available.
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 6. The resulting series should be considered accordingly.
|Q1 2022||Q2 2022||Q3 2022||Q4 2022||Q1 2023||Q2 2023|
Download this table Table 6: Balancing adjustments applied to the GDP quarterly national accounts dataset.xls .csv
GDP monthly estimate
Although this release focuses on providing the best quarterly estimate of GDP, an indicative monthly path for the updated time series is provided in the dataset. A full breakdown of the monthly data consistent with this quarterly release will be available in the next monthly GDP release (on 12 October 2023).
A number of changes have been made to the methods and data sources used in compiling monthly GDP and output approach to measuring GDP estimates as part of Blue Book 2023.
As announced in our Blue Book 2023 changes article, we have made a number of deflator improvements as part of Blue Book 2023. The following deflator improvements have been incorporated in our monthly GDP estimates. These will affect all industries that produce these products.
The weights used to combined the Producer Price Index and Export Price Index to create an overall output price have been improved for all of manufacturing.
The amount of Services Producer Price Indices (SPPI) has been increased, replacing lower quality deflators for the following products:
CPA_J62: Computer programming, consultancy and related services
CPA_J63: Information services
CPA_M691: Legal activities
CPA_M692: Accounting, bookkeeping and auditing services; tax consulting services
CPA_M70: Services of head offices; management consulting services
CPA_M71: Architectural and engineering services; technical testing and analysis services
CPA_M73: Advertising and market research services
CPA_M74: Other professional, scientific and technical services
CPA_N82: Office administrative, office support and other business support services
A new methodology to account for changes in the quality of computer hardware has been included within the deflator for product CPA_C26: Computer, electronic and optical products.
The deflator for product CPA_M72: Scientific research and development services has been updated to include a Consumer Price Index (CPI).
Implied deflators from household final consumption expenditure have been replaced with Consumer Price Indices (CPI).
Non-market and market sector breakdowns
We have expanded our non-market output industry coverage to be consistent with our approach to supply and use, bringing in data for the non-profit institutions serving households (NPISH) sector to go alongside general government data sources.
The annual Blue Book processing, where we align our monthly output estimates with the higher quality annual estimates of gross value added (GVA) from supply use, is now done separately for each sector, using estimates of market output for the market sector and non-market output for the non-market sector. These concepts are slightly different as the non-market sector can produce market output where an economically significant fee is charged, which will be included in the GVA estimate but the approach taken provides the best estimate in the short term.
Estimates of GVA in the most recent time periods (often referred to as “the tail” which are time periods beyond where supply use estimates are available), are created separately for the market and non-market sectors by splicing the growth from our market and non-market output series onto the series that have been aligned to sectors GVA from supply use. This removes the need for fixed based weights for aggregating market and non-market data to estimate the total economy.
Market output continues to be measured in the same way, predominantly using the Monthly Business Survey (MBS). Whilew the MBS will pick up some non-market output of the NPISH sector, this is a small component and it remains the best estimate of market sector growth in our short-term estimates.
Office for Statistics Regulation revisions of estimates of UK GDP review
As previously announced, the Office for Statistics Regulation (OSR) is undertaking a short review into the practices around the preparation and release of information about revisions to estimates of GDP. For more details please contact email@example.com.Nôl i'r tabl cynnwys
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) QMI.
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.Nôl i'r tabl cynnwys
Office for National Statistics (ONS), released 29 September 2023, ONS website, statistical bulletin, GDP quarterly national accounts, UK: April to June 2023
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