GDP in United Kingdom
United Kingdom - GDP
Gross domestic product (GDP) is the most relevant measure to assess the performance of the United Kingdom (UK) economy (Economic Growth, GDP). The Office for National Statistics (ONS) publishes GDP numbers on an annual and quarterly basis (GDP News). The table below shows the change of price-adjusted gross domestic product for the UK, typically referred to as the UK’s economic growth rate. A more complete assessment of the UK’s GDP can be found below the table.
United Kingdom - GDP Data
|Economic Growth (GDP, annual variation in %)||2.0||2.9||2.3||1.8||1.8|
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United Kingdom GDP Chart
Source: Office for National Statistics (ONS).
OverviewGross domestic product (GDP) measures the economic performance of a country over a given period, typically a year or a quarter. It is therefore the most important economic indicator to evaluate the country’s economy (see our GDP page for more information on this indicator).
UK’s GDP data (National Accounts, NA) are produced by the Office for National Statistics (ONS) based on the European System of National Accounts (ESA95; ESA10 as of Q2 2014), which in turn is based on the System of National Accounts (SNA93, SNA08 ). The ONS has provided National Accounts data since 1996. Previously, the Central Statistical Office performed this role.
UK’s GDP Growth Performance
In the 10 years before the Great Recession, from 1999 to 2008, the UK’s gross domestic product grew 2.8% on average per year. As a consequence of overinvestment in the housing market and consumer’s strong dependence on credit, the economy was hit very hard by the financial crisis and the credit crunch. In 2009, GDP fell 5.2%, mainly due to plummeting private fixed investment. However, GDP rebounded in 2010 to a 1.7% expansion. In the three subsequent years, however, growth did not post figures as strong as those before the crisis; average GDP growth was1.0% in the 2011–2013 period.
Structure of British Gross Domestic Product
The British economy is mainly driven by domestic demand. Although the country is a strong exporter of services—especially those linked to the financial and IT sectors—its import capacity through consumption maintains the external sector in a broadly stable deficit. Given that the city of London is among the world’s top three financial hubs, it usually is easier for local firms to access external funding as compared to other countries; this fosters credit availability and investment opportunities. This is commonly seen as a key factor in the country’s economic performance and also as one of the reasons the UK appears to have exited the recent financial crisis on stronger footing than some of its European counterparts.
The main drivers of GDP growth are mainly private investment and private consumption, whereas public expenditures have been contained and have even decreased in recent years. Economic activity is increasingly concentrated in London, which also helps to explain that economic growth stems mainly from the services sector. It is precisely this sector that accounts for the lion’s share of economic output. More than three quarters of the country’s GDP is generated in the services sector, whereas manufacturing and construction roughly account for the rest.
When are British GDP Data Released?
The Office for National Statistics (ONS) publishes the National Accounts (GDP) data on an annual and quarterly basis. Approximately 25 days after the end of the quarter, the ONS releases a preliminary estimate of GDP for the previous quarter, i.e. in late April, July, October and January of the next year. A second estimate is released approximately 45 days after the end of the quarter, i.e. in the middle of May, August, November and February of the next year. The final Quarterly National Accounts Estimate is released in the last month of the next quarter (for instance, the Q1 2014 final estimate is released in June). Annual GDP data for the previous year is released along with the last quarter of the year final GDP estimate, i.e. in March of the next year. A detailed release calendar of the UK’s GDP figures can be found here.
How are British GDP Figures Computed?
The Office for National Statistics (ONS) calculates the GDP as an estimate of the aggregated economic activity in the UK. The final GDP figure is constructed by balancing the estimates from three different approaches: the output or production approach, the income approach and the expenditure approach. In theory the three approaches are equal, although they may differ due to errors and omissions. Discrepancies might appear when using different approaches, not only because of the methodology, but also because the ONS combines its data with Her Majesty’s Revenue and Customs’ (HMRC) data.
The output or production approach determines the value added of all producers as the difference between the value of goods and services produced (output) and intermediate consumption, adding the indirect taxes (i.e., taxes on products), and subtracting the subsidies on products. In addition, the ONS measures the gross domestic product through the demand side. The income approach consists of adding up the income generated by the three production factors in the economy: capital, labor and land. Therefore, this approach adds the interests paid on capital, the firm’s profits, the wages paid on labor and the rents paid on land. Finally, the expenditure approach calculates the expenditure for the final use of goods and services, i.e., final consumption expenditure of households and government final consumption expenditure, gross capital formation and the balance of exports and imports (net exports) of goods and services.
How Accurate are British GDP Numbers?
The ONS publishes the first release of gross domestic product data to meet users’ needs for up-to-date results. Despite the ONS publishing the preliminary and the final estimate, it also revises previous GDP releases. Along with the quarterly estimates, a revision of previous quarterly GDP figures is provided for the three different approaches to national accounting. Apart from the revisions that come with the second estimate and the final estimate for each quarter, the previous year’s data is also revised several times in a year.
Revisions may happen when data from different sources are aggregated. Other changes could happen due to methodology, concepts or classifications. For instance, in 1998 the ONS introduced the European System of Accounts 1995 (ESA95); in 2001 the National Accounts introduced new sources of data and in 2011 the ONS introduced a new industrial classification (the Standard Industrial Classification 2007, SIC07). Whether or not the changes take place, the ONS data is usually accurate and does not face strong revisions.
Why are British GDP Data Important?
GDP growth is generally considered the most important indicator to measure the economic performance of a country. The rate of change of the real GDP is referred to as economic growth and is the best gauge of an economy’s ups and downs. It is particularly useful for short-term analysis. Next to the headline GDP growth figure, the ONS provides information including the key findings of each quarterly reading, which helps to understand the direction that the economy is taking and to put the focus on the most important factors affecting the economic output. Sometimes the ONS provides interesting and intuitive multimedia pieces to help users understand the calculation of GDP or other important economic statistics. For example, 14 ways ONS statistics help you understand the economy.
Where Can I Get Forecasts for British GDP?
Forecasts for British GDP growth are elaborated by many sources. The government, banks, consultancies and think tanks closely watch the British economy and regularly update their forecasts for the UK’s GDP growth. FocusEconomics collects more than 30 different forecasts on British GDP and provides an average (Consensus Forecast) from the economists surveyed. Together with the minimum and the maximum projections for British GDP growth, you get a comprehensive overview on the UK’s future GDP growth rates.
Forecasts for British GDP growth are included in the monthly FocusEconomics Consensus Forecast for the United Kingdom, and the monthly Major Economies (G7 and BRIC) report. All reports are available both on an ad-hoc basis and via an annual subscription (including optional Excel support). Download a free sample or purchase the report directly via our Online Store. The report is available immediately after purchase.
United Kingdom Facts
|Bond Yield||0.61||-3.04 %||Jul 31|
|Exchange Rate||1.22||-0.35 %||Jul 31|
|Stock Market||7,587||-0.26 %||Jul 31|
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