UK economy about 1.3pc larger than previously thought, growth revision shows

Reuters | Published: June 27, 2019 20:57:03 | Updated: July 08, 2019 11:57:53

Offices along with St Paul's cathedral and construction cranes are seen on the skyline in the City of London, Britain on November 2, 2015 — Reuters/Files

Britain’s economy is around 1.3 per cent larger than previously thought - a gain of 26.0 billion pounds ($33 billion) - statisticians said on Thursday after a major revision of growth data from the past 20 years.

Britain is the world’s fifth-largest economy, with annual economic output worth $2.8 trillion last year according to figures published by the International Monetary Fund in April.

New analysis by Britain’s Office for National Statistics shows that average annual gross domestic product growth between 1997 and 2016 was about 0.1 percentage points higher than previously estimated at 2.1 per cent.

However, the figures do not change the broader picture of a marked slowdown in growth since the 2008 global financial crisis and they capture only a few months of the period after the Brexit referendum in June 2016 which has weighed on the economy.

Moreover, growth since 2008 appears to have been even more reliant on domestic consumption rather than investment - something which was already a concern for British policymakers.

Thursday’s growth upgrade was largely driven by reductions in estimates of how long assets such as buildings, computers and machinery can be used for, the ONS said, and comes as part of a three-year plan to improve the price data used to calculate GDP.

The economic output of Britain’s government and non-profit sector is based on the cost of the inputs used, and a faster depreciation of assets translated into an effective increase in annual spending and production, an ONS statistician said.

Changes in depreciation did not have the same effect on estimates of business output, which are calculated differently.

More detailed estimates will be published on September 30.

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