The Office for National Statistics (ONS) first introduced experimental quarterly estimates of regional gross domestic product (GDP) in September 2019. By international standards these were advanced, not only because of how quickly they were produced or their granularity – being broken down by both industry and region – but also how they were compiled.
Unlike many ONS statistics, these estimates were produced almost entirely from administrative data – in this case, Value Added Tax (VAT) returns rather than business surveys – which allowed these data to be published around 18 months sooner than those produced previously.
However, while VAT data are a fast and good quality indicator of businesses' turnover, they do not always provide information on where activity is taking place, particularly for multi-site businesses. In addition, VAT returns do not provide insights into the public sector, where money often does not directly change hands, and estimates are instead based on the number of operations undertaken or the number of children taught in classrooms.
As part of our ongoing commitment to continuously improve the accuracy and reliability of our quarterly regional estimates, statistical improvements were made in September 2022. The aim of these improvements was to better balance together the various sources, producing better aligned estimates for each region and industry.
However, having now gone through both the coronavirus (COVID-19) pandemic and the impact of the Ukraine War on energy prices, reviews found that revisions were larger than anticipated. As a result, we have taken the decision to pause these important data while we work to improve how and when estimates are aligned. This is to try to reduce the level of revisions and provide more certainty to users.
Working with the independent Economic Statistics Centre of Excellence (ESCoE), we will work to review how these data are aligned to national estimates, as well as reviewing the impact of receiving late VAT returns.
We plan to restart publication of these important data in a year's time, ensuring that policymakers will have access to the best possible information about how the economy is changing in our nations and regions. We will continue to keep users informed as we move through this process.