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  • ONS Economic Forum Email:economicforum@ons.gov.uk Twitter:@ONS #ONSeconomy Website: http://www.ons.gov.uk/ons/about-ons/get- involved/events/events/economic-forum/index.htmlhttp://www.ons.gov.uk/ons/about-ons/get- involved/events/events/economic-forum/index.html 15 January 2015 1
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  • ONS Economic Forum January 2015 09.45Introduction & welcome 10.00Johnson review of price statistics 11.00Refreshment break 11.30Whats new 12.10Whats next 12.30Close 2 Agenda
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  • Introduction and welcome John Pullinger, National Statistician ONS Economic Forum 15 January 2015 3
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  • The Johnson Review Paul Johnson, Institute for Fiscal Studies ONS Economic Forum: 15 January 2015 4
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  • Whats new Peter Patterson, Deputy Chief Economic Adviser ONS Economic Forum 15 January 2015 5
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  • Latest ONS economic statistics, including quarterly national accounts New quarterly release on indicators of economic well-being NA measure of living standards - relationship between RHDI and GDP growth Variations in the inflation experience of UK households Whats new - outline 6
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  • Sharp fall in inflation to 0.5%, record low 7 % changes on a year earlier
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  • GDP growth stabilised in 2.5-3% annual range during past year 8
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  • Revisions to three measures of GDP 9
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  • Mean revisions to GDP growth estimates 10 Source: OECD 4 time intervals: M5_P 5 mths Y1_P 1 year Y2_P 2 years Y3_P 3 years Percentage points
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  • Services maintain the momentum of growth 11 More than half of growth in services output (or 70% of cumulative GDP growth) since 2011 is due to 3 sectors: Other professional service activities Admin & support service activities Real estate activities
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  • Sectoral financial balances 12
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  • UK current account deficit 13
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  • Primary income balance 14
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  • Economic Well-being Q3 2014 Traditional measures of progress such as GDP are increasingly considered an incomplete picture of the state of the nation. First of regular quarterly bulletins to coincide with QNA. Economic Well-being provides a fuller understanding of the economy & how it impacts on national well-being To give a more rounded and comprehensive basis for assessing changes in material well-being 15
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  • GDP, GDP per head and NNDI per head 16
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  • GDP and household income per head 17
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  • Cumulative contributions to growth since 2007 GDP and RHDI 18 GDP = 1,618bn in 2011
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  • Variation in the inflation experience of UK households Developed alongside the Johnson Review, this paper is one response to their second recommendation: the regular publication of inflation indices for sub-groups in the UK Uses micro-level expenditure data and detailed price indices to estimate inflation rates for: o Expenditure and income deciles o Households with and without children o Retired and non-retired households Published 15 th December 2014, it is the first UK paper to do this on a CPI consistent basis Full methodology and supporting documents available online, headline results presented here 19
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  • Lower income households have experienced higher inflation rates... Note: 1= lowest income, 10= highest income 20
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  • ... as have lower expenditure households Note: 1= lowest expenditure, 10= highest expenditure 21
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  • Retired households have experienced higher price increases than non-retired households... 22
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  • ... mostly because of Energy & Fuel costs 23
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  • Headline results, average inflation 2003 - 2013 % Group Inflation Decile of 12910 Disposable Income Expenditure Households with Children2.4 Households without Children2.7 Retired Households 2.8 Non-Retired Households2.5 CPI 2.6 24
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  • Whats next Frankie Kay, Head of National Accounts Methods and Development Derek Bird, Head of Prices ONS Economic Forum 15 January 2015 25
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  • Whats next - outline ONS response to NSQR of National Accounts and BoP Flow of Funds Blue Book 2015 plans New ONS website Prices update owner occupier housing costs, house price consultation, web- scraping and scanner data 26
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  • NSQR of National Accounts and Balance of Payments ONS Response - Overview ONS very supportive of review recommendations and suggestions and grateful to Dame Kate Barker and Art Ridgeway ONS accepts most of the recommendations completely and partially accepts the remainder (where full acceptance requires further practical considerations, review or consultation) Response to the review means we will: develop annual volume balanced Supply and Use tables. This will include the introduction of annual double deflation of Gross Value Added, reintroduction of the Purchases survey and a possible change to the alignment of GDP(O) with annual expenditure. develop the IDBR review capital stock methodology including consultation with experts prioritise development of the extended flow of funds dataset draw on wider statistical and economic expertise to support and enhance our work Response work will be open to public consultation later in 2015 and will influence future work plans 27
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  • Flow of Funds Developing financial data is considered essential for identifying the build-up of risks in the financial sector and to understand better the financial connections. An important part of this development is the Flow of Funds. New tables published in BB14 (Chapter 14). 28
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  • Flow of Funds ONS is considering wider options for developing Flow of Funds datasets, in conjunction with the Bank of England Wider consultation and user engagement will be taken forward this year A business case is being prepared around options by May/June 2015 Email: Flowoffundsdevelopment@ons.gsi.gov.uk 29
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  • Scope of BB 2015 On-going work to address Gross National Income (GNI) reservations Classification changes Other methodological improvements Take on of new data and moving forward base and reference year 30
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  • BB15 Communications Similar process to Blue Book 2014 Series of articles on impact of changes Seminars and user groups External peer review 31
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  • Saving and visible income Users have requested a measure of the saving ratio that corresponds more closely to the economic factors that are pertinent to households' decisions on what to spend and what to save. ONS considering whether to publish a supplementary indicator that users may find useful, including reviewing the approach taken by other countries Stakeholders will be consulted ahead of any publication 32
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  • Alpha.ons.gov.uk 33
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  • House price index consultation User consultation around the development of a single 'official' house price index - closed 12 December 2014. Over 40 responses received and good attendance at a series of user events held across UK. ONS will publish formal response to the consultation by mid-March 2015. Further work to follow after which a case for the next stage of the development will be put before departments for agreement to proceed. 34
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  • Owner occupiers housing costs in CPIH National Statistics status was suspended for CPIH in August 2014 ONS and VOA have completed work looking into Owner Occupiers Housing (OOH) component Growth in private rents now more responsive to recession Still at odds with HPI, but rents a stock measure and HPI a flow measure 70% of rent updates result in no price change 35
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  • OOH - next steps Improvements to OOH in CPIH will be introduced as part of the 2015 annual update on 24 March 2015 Revise only OOH component of CPIH back to 2005 Article documenting the improvements to be published 30 January 2015, responds to Johnson Review: Recommendation 21 Planned user event in February/March around housing statistics 36
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  • OOH - next steps Also take opportunity of revision to VOA data to align OOH weight in CPIH with national accounts estimates historically and anticipate methodological changes to the measurement of imputed rents, planned for BB16. Begin process for re-accreditation of National Statistic status for CPIH (from 30 January 2015), aim for process to be completed March/April 2015 37
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  • Prices by webscraping ONS is looking at alternative options for obtaining price quotes including: 1. Scanner data 2. Web scraping Web scraping can be: 1. collected by the ONS directly 2. purchased. ONS is investigating both of these options in two research phases Phase one: Web scraping started in April 2014 collecting 35 CPI/RPI items from 3 online supermarkets 6,500 price quotes collected daily Prototype cleaning and classifying programs have also been set up and exploratory analysis is being conducted on the data Phase two: Will assess data ONS has recently purchased from mys