Britain's statistics agency said on Thursday that it is taking steps to ensure it can see when the economy is heading into recession sooner than it has in the past, after being slow to spot when Britain last entered recession in 2008.
Britain’s statistics agency said on Thursday that it is taking steps to ensure it can see when the economy is heading into recession sooner than it has in the past, after being slow to spot when Britain last entered recession in 2008. British gross domestic product data is produced faster than in almost all other major economies, but early versions of the numbers contain a large proportion of estimated data and faces frequent, occasionally sizeable, revisions. Last year a review by former Bank of England deputy governor Charles Bean concluded that confidence in Britain’s Office for National Statistics had fallen, and said statisticians needed to think more about whether their figures made economic sense.
On Thursday the ONS said it planned to use a wider range of data sources to cross-check early versions of its GDP data. These include monthly government figures on value-added tax revenue, which can be compared with the ONS’s own surveys of businesses, as well as Bank of England data on activity in the financial services sector. “It is vital that ONS is able to pick up turning points as soon as they happen, enabling policymakers to respond quickly,” ONS statistician Darren Morgan said. Statisticians will also look more closely at raw spending data before adjusting them for inflation, to spot any trends or anomalies that might get masked when they converted the data from nominal into ‘real-terms’ figures.
Some changes had already been made, while others would be implemented through 2017, the ONS said. ONS growth data has seen relatively little revision since Britain voted to leave the European Union in June 2016, and has generally painted a picture of steady expansion – in contrast to private sector surveys that pointed to a steep downturn. However, in 2008 the ONS was three months late in noticing Britain’s economy had entered recession, and significantly underestimated the size of the downturn. It was later slow to spot the recession was easing and that Britain had returned to growth, and in early 2012 produced data that wrongly implied Britain had re-entered recession.