Economic Growth statistics

Summary

Gross Domestic Product, better known as GDP, is a core macro-economic indicator that measures the size of the economy and how it has grown.  

GDP and its growth are estimated through three main approaches:  

• The production approach, which is the sum of all production activity in the UK. 
• The expenditure approach, which is the sum of all final expenditures (less imports) in the economy. 
• The income approach, which is the sum of all factor incomes in the economy. It also reflects the distribution of value added between wages and operating profits. 

The Office for National Statistics (ONS) publishes GDP estimates on a monthly, quarterly and annual basis. ONS publishes early estimates of quarterly GDP growth around six weeks after the reference period as a first quarterly estimate of GDP; and around 12 to 13 weeks after the reference period as part of the full quarterly National Accounts, where it provides a complete set of accounts for the quarter, taking into account revisions to the component items for earlier quarters.  

The latest quarterly estimates can be revised after the annual supply and use reconciliation exercise. They inform various organisations’ publications (Office for Budget Responsibility’s Autumn and Spring Economic and Fiscal Outlook publications, the Bank of England’s quarterly Monetary Policy Report, and the Chancellor of the Exchequer’s Spring Budget and the Autumn Statement).  

The UK is one of only a small number of countries that produce monthly estimates of GDP. The monthly statistics are valuable as an early indication of the size and growth of the UK’s economy but are prone to revisions. 

The Office for Budget Responsibility uses GDP data to inform its Economy forecast. These are economic forecasts of public finances used to support policy making and the Chancellor’s Budget and the Autumn Statement.  

Things to consider when viewing economic growth statistics

In line with other countries, ONS’s estimates of GDP are statistical estimates rather than an audited number found in the financial accounts of a company. This means GDP is an evolving estimate over time. 

Revisions to GDP and its growth estimates are inevitable and normal. Notices alongside the statistics explaining the role of revisions are there to help communicate this uncertainty and are not a limitation of the statistics. It is important to compare longer-term trends where possible, and not put too much reliance on one particular time period. 

Different countries may use different methods of compiling the components of GDP so international comparability of the estimates may not be a given. 

In general, it is important to bear in mind what is being compared, which time periods are being used, whether any specific factors have led to the choice of starting period etc. 

What to look out for when hearing statements on economic growth 

The figures used in the statistics should be clearly labelled as being in either nominal values (current prices) or real values (chain-volumed measures, which remove the impact of inflation). Real values, which remove the effects of inflation, are generally the preferred measure as using nominal values can be misleading, even if clearly stated, because of the need to remove inflationary effects. 

Claims that compare changes in forecast growth against outturn growth or future forecasts of growth should be clear on the baseline for the comparison and the way in which growth is expressed (for example indexed or differenced between time periods). Examples of the claims could be, saying the economy is now forecast to be around X% bigger or smaller by a future date than it would have been forecast to grow at the rates forecast at the baseline date. 

Data visualisations presenting changes or comparisons in economic growth should be to scale, to avoid exaggerating positive or negative economic growth to suit a particular narrative. 

For international comparisons of growth, ensure that as far as possible, the comparisons are like-for-like, or understand the impact of any differences in comparability. Where possible, statements should use a consistent choice of countries to compare against, such as the G7, the largest economies in Europe etc.  

Statements about relative performance over one quarter or a small number of quarters or years can be misleading and the longer the period used the better the basis for comparison. The starting point used for comparisons will be a key point when comparing growth.  

Wider support 

We recently conducted a rapid review of Revisions of estimates of UK Gross Domestic Product (GDP), providing guidance on improving the communication of uncertainty and revisions of economic growth statistics.  

ONS has also published several blogs to aid understanding of economic growth and its statistics: 

• ‘GDP – Bringing the big picture up-to-date’ 
• ‘Measuring GDP: Revisions are fact of statistical life’ 
• ‘What is GDP and how do we measure it?’ 

More information on the methodology of GDP can be found on the ONS’s Gross Domestic Product (GDP) Quality and Methodology Information (QMI) Article. 

The Institute for Fiscal Studies (IFS) is an independent economics research institute. The IFS publishes its own analysis and forecasts on a range of economic and fiscal topics. 

The National Institute of Economic and Social Research (NIESR) is an independent research institute that carries out research into the economic and social forces that affect people’s lives.