Revisions of estimates of UK Gross Domestic Product (GDP)

Published:
29 November 2023
Last updated:
14 May 2024

Key Facts about GDP

What is GDP?

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  • A core macro-economic indicator
  • It measures the value and volume of goods and services produced in the UK
  • It measures the size and growth of the economy

 

What are the challenges in estimating GDP?

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It is impossible to measure the activities of every producer and household in the country.

 

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GDP estimates are not the result of a single large survey or census.

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A very complex production system – using surveys, administrative sources and assumptions – estimates GDP

 

The three approaches to estimate GDP and their individual components

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The image above demonstrates the three approaches used to estimate GDP and the individual components of each approach.

Production approach: Output – Intermediate expenditure + Taxes on products – Subsidies on products

Income approach: Compensation of employees + Gross operating surplus and mixed income + Taxes on products and production – Subsidies on products and production

Expenditure approach: Final expenditure + Capital investment + Exports – Imports

 

Why are early quarterly GDP estimates important?

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They are used by the Bank of England when making important monetary policy decisions in the monetary policy report

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They are used by the Office for Budget Responsibility when reviewing fiscal policies in the autumn and spring economic and fiscal outlooks

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They are used by the Chancellor of the Exchequer when setting fiscal policies in the spring budget and autumn statement

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However, detailed structural data for such estimates are often not available in a timely manner

 

Why are estimates of GDP revised?

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Early estimates of GDP are mainly compiled using growth indicators for output (the production approach)

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With time, more detailed information becomes available, building a more comprehensive picture of the economy. This can take up to two years after the reference period.

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Early GDP estimates are revised to include information from other parts of the economy, such as structural business surveys and administrative data on wages and taxes, as they become available.

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Revisions are normal and unavoidable. They are an inherent part of estimating GDP

 

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