Home > UK GDP > UK 2012 Q1 Quarterly National Accounts

UK 2012 Q1 Quarterly National Accounts

The Month 3 revisions for 2012 Q1 GDP are out, as well as updated data going back forever.

The shocking news is that 1949 nominal GDP has been revised down by 0.024%.   This comes from the fact that the ONS use estimates of output volume as inputs, and then invent a deflator series to derive nominal spending.  But then they revise the deflator; in this case the switch from an RPI to CPI-based deflator has caused downgrades to NGDP going back a long way.

A change to the treatment of insurance company output has upgraded the 2005 real GDP growth figure from 2.0% to 2.8%.  The ONS explain all.

Back to 2012.  As often happens, it looks like some nominal spending has been smoothed out across recent quarters.  Look at those deflators.  Just awful, and the Q1 deflator is flattered by NGDP at market prices growing slower than NGDP at basic prices.  The “ex VAT” basic prices deflator for Q1 would be +3.8%.  What. The. Heck?

Quarter on quarter growth, seasonally adjusted annualized rates:

Quarter Nominal GDP GDP Deflator Real GDP NGDP at Basic Prices
2010 Q2 4.5 1.6 2.8 4.2
2010 Q3 4.1 1.6 2.4 3.9
2010 Q4 2.6 4.2 -1.5 1.6
2011 Q1 5.6 3.8 1.6 3.4
2011 Q2 1.1 1.5 -0.4 1.1
2011 Q3 3.0 0.4 2.4 1.8
2011 Q4 1.2 3.0 -1.2 1.3
2012 Q1 1.8 3.0 -1.5 2.3
Categories: UK GDP
  1. asdasdasd
    June 28, 2012 at 11:52

    Interesting, apologies, I’m being a little slow this morning, could you explain:

    “just awful, and the Q1 deflator is flattered by NGDP at market prices growing slower than NGDP at basic prices. The “ex VAT” deflator for Q1 would be +3.8%. What. The. Heck?”

    Why are these figures so bad? What is the “ex VAT” deflator? What is the difference between NGDP at market and basic prices?

    Also what are the ONS IDs for each of those series?

    Apologies for the basic questions…

  2. June 28, 2012 at 12:15

    I should have added the ONS series codes. YBHA (NGDP), YBGB (GDP Deflator), YBEZ (Real GDP), ABML (NGDP at basic prices).

    NGDP at market prices includes indirect taxes; NGDP at basic prices does not. Market prices = sticker prices. Basic prices = actual revenue to vendors. If I sell £60 of goods including £10 of VAT @ 20%, that contributes £60 towards NGDP at market prices, and £50 towards NGDP at basic prices.

    “ex VAT” deflator is sloppy wording. The GDP deflator is calculated against NGDP at market prices, so when VAT changes, the deflator is “distorted”. What we really care about is the supply-side’s ability to provide more goods and services for given NGDP at *basic prices*. In Q1, NGDP at basic prices went up at a 2.3% annual rate, but the supply side provided *fewer* goods and services; real GDP fell at a 1.5% rate. The difference between the two is the 3.8%.

    That is a very very bad number. It is likely to be revised, of course. But it implies we have very series supply side problems, not just demand-side problems.

  1. August 28, 2012 at 12:54

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