Ben Chu: Don't expect revisions to save the day
Outlook It turns out we're a nation of savers after all. That's what some headlines implied this week after the Office for National Statistics said the new pan-European Union statistical methods it will implement this autumn will have the effect of boosting the household savings ratio from its current paltry-looking 5 per cent to a much healthier 10 per cent.
We should calm down, though. The revisions to the ratio are interesting for a cross-country comparison but they are unlikely to change the picture of UK consumer behaviour in recent years. This is because the ONS has said revisions to the savings ratio will be applied to the latest numbers and the series going back to 1997.
What matters when we're looking at the behaviour of consumers is less the size of the ratio than the rate of change. The present profile shows the savings ratio shooting up in the recession as the public sought to reduce the size of their debt burdens relative to their incomes. And the ratio has come down more recently, fuelling the recovery. The savings ratio is likely to continue to show that up-down trajectory, albeit from a higher starting point, after the ONS's revisions are implemented.
There is a post-modern flavour to some of the commentary about revisions to official statistics: "How can we ever discuss anything when the numbers can change?" This is overblown. Yes, there is inherent uncertainty around the official economic statistics and that should be reflected in the debate. But some data, partial and provisional as it may be, is a far better basis for policymaking than gut feeling.
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