Government rewrites UK economic history

ECONOMIC HISTORY was rewritten yesterday with the release of new UK national accounts designed to bring us into line with Europe and improve the accuracy of official statistics.

The Office for National Statistics (ONS) said the UK economy has been performing significantly better - particularly in the last decade - than had been thought. Economic growth was stronger, the trade deficit smaller and investment record better than the old official figures indicated.

The net effect of the revisions - which affected records as far back as 1948 - was to raise the level of UK economic growth by an average of 0.2 per cent a year. The most marked improvement came in the last decade, where there were substantial data changes.

The new figures show that the 1991/92 recession finished six months earlier than first thought. Economic growth measured by gross domestic product (GDP) switched from negative to positive in the third quarter of 1992 rather than the first quarter of 1993. As a result, the British economy expanded by 0.1 per cent in 1992. Economists thought the economy had shrunk by 0.5 per cent over the year.

The 1991/92 recession was shallower than first thought, and the subsequent recovery stronger. Using the old method, the sharpest fall in UK growth was in the second quarter of 1991, when the economy contracted by 2.9 per cent. Using the new method, however, the economy contracted by only 2.5 per cent. According to the original ONS numbers, the economy grew by 2.7 per cent in 1995 and 2.2 per cent in 1996. But in yesterday's release, the growth figures were 2.8 per cent and 2.6 per cent respectively. The cumulative effect of the changes meant that 1997 GDP, calculated at current market prices, was more than pounds 15bn higher than previously thought.

Recent data on the UK's balance of payments was sharply revised. The current account deficit in the first quarter of the year, for example, was revised down sharply from pounds 3.2bn to pounds 0.5bn. In the second quarter of the year, the current account recorded a surplus of pounds 600m, to the surprise of City analysts.

Dharshini David at HSBC Securities said: "This does suggest that the the Asian crisis and the strong pound did not have quite as much of a detrimental impact as previously thought."

The ONS said there were a variety of reasons for the changes, including the legal requirement to make UK national accounts more like those of our European partners. The so-called European System of Accounts (1995) is different to the current UK system in numerous ways. For example, under ESA, mineral exploration is classified as "investment" not "expenditure", as is computer software. Other changes were designed to improve the reliability of official data, for example by helping eliminate data gaps and double- counting.

Although the new accounts make interesting reading for economic historians, the figures are unlikely to have substantial implications for today's policymakers, according to City economists.

Second-quarter GDP growth was little altered by the revisions. Quarter- on-quarter growth was left unchanged at 0.5 per cent, while the year-on- year rate was revised up 0.4 per cent to 2.6 per year. Manufacturing growth over the quarter was revised up from 0.1 per cent to 0.3 per cent.

Outlook, page 19

Start your day with The Independent, sign up for daily news emails
News
Courtney Love has admitted using heroin while pregnant with Frances Bean Cobain, her daughter with Kurt Cobain
people
Sport
Murray celebrates reaching the final
tennis
Life and Style
life
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness