Changes to the compilation of UK National Accounts and Balance of Payments Statistics

Presenter: Dr Robert Dunn, ONS.

Contents

• Background

• Differences between ESA95 and ESA2010

• Differences between BPM5 and BPM6

• Changes which impact on GDP/GNI

Background

Development of international guidance manuals

Pre-1930s ..…1930s ..… 1940s ...… 1950s ..… 1960s ..… 1970s ..… 1980s ..… 1990s ..… 2000s ..…

UN SNA 1953 1968 1993 2008

Eurostat ESA 1970 1979 1995 2010

IMF BPM 1948 1950 1961 1977 1993 2008

Background

The framework of the System of National Accounts(SNA) and European System of Accounts (ESA) manuals provides accounts that are:

• Comprehensive

• Consistent

• Integrated

Background

Framework of the Balance of Payments manual

provides accounts that display links between an

economy and the rest of the world.

Background

• ESA 2010 forms part of a Regulation of the European Parliament and the Council on the European System of National and Regional Accounts in the European Union.

• Regulation is still to be confirmed (end of 2012)

Differences between ESA95 and ESA2010

1. The recognition of research and development as capital formation leading to assets of intellectual property

2. Expenditures on weapon systems that meet the general definition of assets are classified as fixed capital formation

3. The analytical concept of capital services has been introduced for market production

4. The financial assets boundary has been expanded to include a wider coverage of financial derivative contracts

Differences between ESA95 and ESA2010

5. New rules for recording pension entitlements

6. Rules on change of ownership has been made universal, resulting in changes to recording of merchanting, and goods sent for processing (both abroad and in the domestic economy)

7. More guidance is given on financial corporations in general and special purpose entities (SPEs) in particular

Differences between ESA95 and ESA2010

8. The treatment of super dividends paid by public corporations has been clarified

9. The principles for the treatment of public-private partnerships have been set out and the treatment of restructuring agencies expanded

10. Transactions between government and public corporations and with securitisation vehicles have been clarified

Differences between BPM5 and BPM6

1. Revised treatment of goods for processing and goods under merchanting

2. Changes in the measurement of financial services, including Financial Intermediation Services Indirectly Measured (FISIM), spreads on the purchase and sale of securities, and measurement of insurance and pension services

3. Elaboration of direct investment. Treatment of chains of investment and fellow enterprises, and presentation on a gross asset and liability basis as well as according to the directional principle

Foreign Direct Investment

All transactions measured net

Current:

Directional principle

International Guidance Manual Update

Future:

Extended directional principle

All transactions measured gross and on an asset & liability basis

Differences between BPM5 and BPM6

4. The introduction of the concepts of the reserve-related liabilities, standardised guarantees, and unallocated gold accounts

5. New concepts on the measurement of international remittances

6. Increased focus on balance sheets and balance sheet vulnerabilities

7. Harmonisation with SNA2008

Changes affecting GDP/GNI

1. Capitalisation of R&D.• Impact on GDP estimated to be 2-3% of current GDP

2. Capitalisation of expenditure on weapon systems.• Impact on GDP estimated to be < 1% of current GDP

3. Changes in the recording of pension entitlements.

• Impact on GDP estimated to be < 1% of current GNI

4. Refined method for calculating Financial Intermediation Services Indirectly Measured (FISIM).

• Impact on GDP estimated to be -0.8% to +0.5% of current GDP

Changes affecting GDP/GNI

5. Recording of the output of non-life insurance services improved.

• Impact on GDP estimated to be < 0.1% of current GDP

6. Valuation of output for own final use by households and corporations to include a return to capital.

• Impact on GDP estimated to be < 0.1% of current GDP

7. Cost of ownership transfer.• Impact on GDP estimated to be < 0.1% of current GDP

8. Originals and copies.• Impact on GDP estimated to be -0.1% to 0.1% of current GDP

Changes affecting GDP/GNI

9. Asset category “computer software” modified to include databases.

• Impact on GDP estimated to be < 0.1% of current GDP

10. Treatment of guarantees elaborated.• Impact on GDP estimated to be <1% of current GDP

11. Fees payable on securities lending and gold loans.• Impact on GNI estimated to be negligible

12. Goods sent abroad for processing recorded on change of ownership basis.

• Impact on GDP estimated to be < -0.1% of current GDP

Foreign direct investment

Measurement of FDI income:

1. All inclusive basis

Includes all income and expenditure streams

2. Current operating performance basis

Excludes

• Realised or unrealised holding gains and losses

• Provisions

• Exceptional items

Discussion

ESA2010 Programme internet page:

http://www.ons.gov.uk/esa2010