Updated Analysis: Why Is GDP Revised?

Why is GDP revised?
Updated Analysis: Why is GDP revised?

By Andrew Walton, Assistant Deputy Director, National Accounts Coordination
Division, ONS
1. INTRODUCTION - GENERAL
The ONS vision is to be widely respected for informing debate and improving decision making through high
quality, easy to use statistics and analyses on the UKs economy and society. Part of meeting that vision
comes from being transparent about the methods that are used to compile the statistics and using all of the
information available at a point in time to produce the best estimate. In deciding when a statistic is fit for
purpose and can be published, there is a trade-off between accuracy and timeliness and the consequence is
that statistics need to be revised. Revisions can only be avoided if either the first publication of the statistic is
delayed until after the final piece of information is received or if information which becomes available after
the time of first publication is ignored, even if it suggests a different picture. Revisions should therefore be
treated as an improvement in quality.
However, users do not always welcome minor changes to the statistics a long time after the event and
therefore for each statistical output, there is a published revisions policy that explains to users when
revisions might be expected. This article builds upon and updates the analysis published in the article Why
is GDP revised?, Walker et al, May 2012, and looks in further detail at the reasons why Gross Domestic
Product (GDP) is revised and what this implies for the methods and assumptions used in its calculation. This
article also extends the analysis to take a first look at nominal GDP revisions and uses a case study to
illustrate the improvements to estimates introduced at each annual National Accounts update (Blue Book).
This article will:
describe the reasons for revisions in more detail

update previous information on revisions to the level of GDP, introducing some new analyses of
current price revisions
provide an analysis of revisions to GDP growths, and the relative performance of revisions through
three separate ten year periods
focus on the 2003 annual GDP revision as a case study
provide conclusions and next steps.
2. INTRODUCTION TO NATIONAL ACCOUNTS

The previous article explained in some detail the process used to compile the GDP estimates, and for
completeness this has been replicated in annex B. Users not familiar with these methods will find it useful to
have the sequence of events in mind when reading this article as it helps to put the reasons for possible
revisions into context.
3. REVISIONS - GENERAL
In the introduction it was explained in general terms why revisions happen and that, for each statistical
output, there is a published revisions policy that explains to users when revisions might be expected. This
policy and the timing of GDP releases is designed to strike a balance between timeliness and accuracy, and
takes account of the user needs for early short-term indicators, reliable estimates generated through
benchmarking to annual sources, and the need for a consistent and coherent picture of the economy. In
more detail, revisions to GDP can be categorised as:
Revisions to a source. This occurs when there are late returns to a statistical survey or ONS
becomes aware of mis-reporting. These factors are particularly relevant to the preliminary estimate
of GDP which is largely based on ONS monthly surveys and are an important source of revision
between the preliminary estimate of GDP and the second and third estimates, published one and
two months later. These surveys ask for the turnover from over 34,000 businesses representing
manufacturing, retailing and a wide range of service sector industries. There is also a monthly survey
of construction output addressed to around 8,000 businesses
Office for National Statistics
Why is GDP revised?
More sources. As explained in annex B, the preliminary estimate of GDP is based on output, the
source of which is largely the ONS monthly surveys. However, for some industries, a nowcast (an
estimate for the current period) is made for the preliminary estimate with the actual source becoming
available in time for either the second or third estimate. In addition, the short-term sources for
expenditure and income components typically become available in the same timescale. The
compilation of the Supply and Use tables makes use of a further set of, largely annual, sources
Revised seasonal adjustment factors. The impact of seasonal adjustment is reviewed continually as
more information becomes available to assess the seasonal impact
Annual chain-linking leads to revisions arising from changing the weights to a new base year for the
last but one balanced Supply and Use year (for Blue Book 2012 this means the weights are based
on 2009 annual gross value added data) to weight together output indicators for subsequent periods
New methods (continuous improvement). The methods used to compile GDP are the subject of
continuous improvement as new sources become available or international best practice is
developed. In Blue Book 2011, the method for deflation was improved by using components of the
consumer prices index instead of the retail prices index, a change that typically added up to 0.2
percentage points to average annual GDP growth. An example of a new source is the improvements
to the measurement of the insurance industry which were implemented in Blue Book 2012
New international standards. Economic statistics in the UK are compiled in line with international
frameworks, standards and definitions, which change in line with changes to the economy that we
are trying to measure. Currently GDP is calculated in line with the 1995 European System of
Accounts (ESA) and the 2007 Standard Industrial Classification (SIC). The former was introduced in
Blue Book 1998 and the latter in Blue Book 2011. Meeting new international standards will often lead
to revisions.
Note: This categorisation excludes any corrections arising from errors in statistical processing. These are monitored separately as part
of the ONS correction policy.
The timing of introducing new methodologies into estimates of GDP is inter-related with the National
Accounts revisions policy. New concepts and methodologies will typically lead to the data for a number of
years being revised and may require re-balancing of the Supply and Use tables (SUTs). This happens during
the annual update of the United Kingdom National Accounts which is known as the Blue Book (BB). In 2011,
when the SIC 2007 was introduced, SUTs were re-worked back to 1997. Blue Book 2012 had a more
restricted revisions policy, except for the revisions to insurance methodology and source data mentioned
above, and the revisions to pre-1997 GDP data to implement the improvements in deflation methodology
(which had already been included in Blue Book 2011 for the more recent periods).
4. REVISIONS TO GDP
Levels
Chart 1 shows successive estimates of the level of the chained volume measure (CVM) GDP for years since
1991 in successive Blue Books from 2003 to 2012. This shows that the picture was relatively unchanged
over the period except for Blue Book 2011 when a significant methodological change was introduced
(change from using retail price indices as deflators to consumer price indices) and also the accounts were
moved onto a SIC 2007 basis. The change in deflators at Blue Book 2011, resulting in a level shift in billion
GDP was, as a transitional step, only taken back to 1997, so there were no revisions pre-1997.
As part of Blue Book 2012 the revised deflation methodology was then applied to the GDP time series pre1997, giving the clearly visible shift in levels shown on the graph in the early years. The reason that the 1991
levels, for example, are lower in Blue Book 2012 is that the 1997 level is unchanged in Blue Book 2012;
hence the change in deflator, which is giving stronger annual growth, means that the years leading up to
1997 will be at a lower level in order to reach the same level by 1997. When presented in level terms, and
apart from methods changes, revisions to GDP are generally small.
Annex G lists the main reasons for revision in each of the last 12 Blue Books. Some revisions will only
impact on the CVM series while others are current price revisions. A future piece of work is for the ONS to
quantify each of these revisions in more detail and show the evolution of the GDP revisions according to
particular reasons for revisions.
Why is GDP revised?
Chart 1: Chained Volume Measure GDP at Basic Prices 1991 to 2012 (BB 2003 to BB 2012):
billion,2009prices
380
360
340
BB2003
BB2004
320
BB2005
300
BB2006
BB2007
280
BB2008
BB2009
260
BB2010
BB2011
240
BB2012
220
2012Q1
2011Q1
2010Q1
2009Q1
2008Q1
2007Q1
2006Q1
2005Q1
2004Q1
2003Q1
2002Q1
2001Q1
2000Q1
1999Q1
1998Q1
1997Q1
1996Q1
1995Q1
1994Q1
1993Q1
1992Q1
1991Q1
200
Note: In BB 2011, consumer price indices replaced the equivalent retail price indices as deflators. This resulted in an upward shift in the
level of GDP ( million) since 1997. This change was then applied to the historic data series (pre-1997) in BB 2012.
Previous articles have focussed on the revisions to the CVM estimate of GDP, which is adjusted to remove
the effect of inflation. The Supply and Use balancing process, as described in annex B is only undertaken on
the current price data ie the data with the effect of inflation included. Recent work by ONS has led to the
publication of current price revisions data in a real-time GDP dataset (accessible from the revisions page of
the ONS website) back to 1989 allowing some initial analyses to be produced on a current price basis. This
further step helps to decompose the annual GDP revisions and distinguish the element coming from Supply
and Use balancing. The same type of analysis is not possible on a quarterly basis because of the way GDP
is constructed. In simple terms the annual current price numbers are deflated to produce a constant price
annual series, which is then used as the constraint through which to produce a quarterly CVM path, and this
path is then re-inflated to produce a current price quarterly path.
Chart 2 shows the quarterly levels of current price GDP at each Blue Book from 2003 to 2012 and is
consistent with Chart 1. The fact that the lines are almost indistinguishable from each other shows the very
small scale of current price revisions, although the path has shifted upwards slightly over time reflectingthe
expansion of coverage of GDP. The most significant revisions come at the first and second Blue Book
estimates for any given year, as shown more clearly by the upward revision to the 2007 estimate between
Blue Book 2007 and Blue Book 2008.
Why is GDP revised?
Chart 2: Current Price quarterly GDP, 1991 to 2012 (BB 2003 to BB 2012):
billion
400
350
BB2003
BB2004
300
BB2005
BB2006
250
BB2007
BB2008
BB2009
200
BB2010
BB2011
150
BB2012
1991Q1
1992Q1
1993Q1
1994Q1
1995Q1
1996Q1
1997Q1
1998Q1
1999Q1
2000Q1
2001Q1
2002Q1
2003Q1
2004Q1
2005Q1
2006Q1
2007Q1
2008Q1
2009Q1
2010Q1
2011Q1
2012Q1
100
So, with the knowledge that the annual Supply and Use balancing process causes very little in the way of
revision to the levels of current price GDP once the second Blue Book iteration has been completed, the
focus is turned back to the revisions to the Chained Volume Measure estimate of GDP.
Chart 3 presents the same information as in chart 1 in index form (2008 Q1=100) for the period Q1 2008 to
Q2 2011, which was used because it features the latest economic downturn and subsequent recovery. It
shows that, as compared with the start of the downturn in Q1 2008, Blue Book 2012 presented a similar fall
in GDP through 2008 as in Blue Book 2011. However, the trough at the start of 2009 was much shallower
and flatter in the Blue Book 2012 dataset, followed by a gradual recovery in the second half of 2009 and
early 2010. The resulting level of GDP at end of 2009 is higher in Blue Book 2012 than previously published
(expressed in index number form, Q1 2008 = 100).This re-profiling of the path of the recession is as a direct
result of the upward revision to 2009 coming from the annual benchmarks and balancing Supply and Use.
Methodological improvements planned for Blue Book 2013 in respect of the allocation of private non-financial
corporations' (PNFCs) profits data may alter the profile of the downturn. Previously data was provided by Her
Majestys Revenue and Customs (HMRC) on a tax year basis and the data was adjusted to a calendar year
basis. However, this methodology did not work so well during the sudden downturn of 2008 when too much
of the downturn was being allocated to 2008 and not enough to 2009. HMRC now provide quarterly PNFC
profits data which will be incorporated in the Blue Book 2013 dataset.
Why is GDP revised?
Chart 3: Chained Volume Measure GDP at Basic Prices 2008 to 2011 (BB 2008 to BB 2012):
101
2008Q1=100,2009prices
100
99
98
BB2008
97
BB2009
BB2010
96
BB2011
95
BB2012
94
93
2012Q1
2011Q4
2011Q3
2011Q2
2011Q1
2010Q4
2010Q3
2010Q2
2010Q1
2009Q4
2009Q3
2009Q2
2009Q1
2008Q4
2008Q3
2008Q2
2008Q1
92
The path of revision through the 2008/09 downturn has been the subject of closer scrutiny and slightly larger
revisions than would be expected in a normal period of stable growth. However, these revisions have
generally been small relative to the estimated changes in GDP itself. Annex D shows the revisions to GDP
levels in the economic downturn of the early 1990s and how this profile has been revised through time.
Levels are one aspect of the story but it is useful to consider revisions to estimated GDP growth rates as
well, as shown in the following sections.
Growth rates
As previously discussed, revisions to the first quarterly estimates of GDP growth are usually due to more
information becoming available whereas the later annual revisions are due to new data sources being used
and changes in methodology.
Focussing first on the initial revisions to growth caused by more information becoming available, Table 1
shows, for the period since Q1 2007, the revision between the preliminary estimate for a quarter and the
third estimate published around 13 weeks after the end of the quarter. Revisions over this timescale are
small, typically 0.1 or 0.2 percentage points in either direction with no evidence of bias. Indeed 18 out of the
last 24 quarters have only been revised by a maximum of plus or minus 0.1 percentage points and the
average revision over the period is only -0.01 percentage points. It is easy to get absorbed in the detail of
each individual revision to GDP, especially if it turns a -0.1% quarter on quarter GDP growth estimate into a
+0.1% growth. The reality is that during the period of 2011 and 2012 the economy has been broadly flat, with
individual quarters often being influenced by special events, and commentators of GDP should focus more
on the quarter on the same quarter a year ago growth rates, and the longer run trend of GDP rather than on
individual movements between successive quarters.
Why is GDP revised?
Table 1: Revisions to GDP growth between the first (M1 = Preliminary) and third estimate (M3 =
Quarterly National Accounts):
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
M1
M3
0.7%
0.8%
0.8%
0.6%
0.4%
0.2%
0.5%
1.5%
1.9%
0.8%
0.4%
0.1%
0.2%
1.1%
0.8%
0.5%
0.5%
0.2%
0.5%
0.2%
0.2%
0.7%
1.0%
0.3%
0.7%
0.8%
0.7%
0.6%
0.3%
0.0%
0.6%
1.6%
2.4%
0.6%
0.2%
0.4%
0.3%
1.2%
0.7%
0.5%
0.5%
0.1%
0.6%
0.3%
0.3%
0.4%
0.9%
0.3%
Averagerevision
Absolute
Revision Revision
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
0.0%
0.0%
0.1%
0.1%
0.2%
0.2%
0.1%
0.1%
0.1%
0.1%
0.5%
0.5%
0.2%
0.2%
0.2%
0.2%
0.3%
0.3%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.3%
0.3%
0.1%
0.1%
0.0%
0.0%
0.01%
0.13%
Revision
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
+0.1%
+0.2%
+0.3%
Count
1
0
0
1
9
6
3
2
2
DenotesaBlueBookQuarterlyNationalAccountsestimate
Footnote: Individual revisions are rounded to 1 decimal place but the average revision has been calculated using the millions data and
is displayed to 2 decimal places.
A longer run time series, including the latest estimate for each quarter is shown in annex E. As explained in
annex B, the amount of information contained in successive estimates of GDP (from the output approach)
increases from 44% in the preliminary estimate to over 90% by the time of the third estimate, but this does
not lead to significant revisions. Delaying the first estimate to either eight or 13 weeks would therefore not
materially change the initial estimate of GDP and the fact that the preliminary estimate is based on "only 44%
information" does not impact on quality.
Of course, both the number of quarters used to monitor revisions performance and the particular quarters
selected will have an impact on the analysis produced. For instance, if we look only at the period from Q1
2008 to Q4 2010 (the latest downturn and recovery), the average revision is still -0.01 percentage points.
The absolute average revision is larger than the 0.13 percentage points for the longer time span above at
0.18 percentage points. This is, at least in part, because it is harder to accurately estimate quarterly
movements during the turning points in an economic cycle; more information on this is given in annex D
which looks at the vintages of data during the early 1990s economic downturn.
Another set of factors which have influenced the revisions performance are the quality improvements made
to the data sources and methodology used to compile the early estimates of quarterly GDP. This is shown
more clearly in annex E by the table of revisions performance between the preliminary estimate and the
Why is GDP revised?
latest estimate. There are more (in frequency) upward revisions than downwards ones because some of the
longer term methodological revisions tend to revise GDP levels (and sometimes growths) higher when new
data sources or concepts are included in the estimates. The following analysis over the last three sets of ten
year revisions periods shows how quality improvements to data sources and methods have affected revision
performance.
Thirty years ago, during the period from 1983 to 1992, the methods used were very different, and there was
also a significant economic downturn in the early 1990s.
Table 2: Revisions to quarterly growth in GDP from Q1 1983 to Q4 1992
RevisionstoquarterlyGDPgrowth
Averagerevision
Averageabsoluterevision(w/oregardforsign)
M1
M3
0.10%
0.29%
M1
M1
M6
M12
0.01% 0.13%
0.40% 0.61%
M1
M24
0.18%
0.67%
M1to
Latest
M1
M36 27/3/13
0.23% 0.42%
0.67% 0.72%
Definitions used in this analysis:

M1 is the preliminary estimate for any given quarter
M3 refers to the Quarterly National Accounts (QNA) estimate for the same quarter
M6 is the QNA estimate for the following quarter, so usually the first revision opportunity
since M3
M12 is the QNA for the third quarter since the initial QNA estimate. Depending upon the
quarter in question the Blue Book can be anywhere from M3 to M15, but will not include new
annual data sources for the period in question
M24 is two years after first publication and will usually have involved a second Blue Book
publication. It is possible that some periods will have been through a first Supply and Use
balance by this point, but it depends on the timing of Blue Book
M36 will usually have seen three Blue Book publications and all quarters will have been
through at least one Supply and Use balance, with some periods having been balanced twice
Latest is the data published on 27 March 2013 and for many of the periods under observation
will be contain multiple Blue Book revisions including longer term methodological and new
international standards
During this period the revisions between the preliminary estimate (M1 above) and the first quarterly estimate
(M3) were +0.10 percentage points and +0.29 percentage points in absolute terms. By the time the data had
been through a year of revisions (M12 estimates) the average revision was +0.13 percentage points and by
the second Blue Book estimate (M24) the average and absolute average revisions were +0.18 and +0.67
percentage points respectively.
Compare this to the same length of revisions analysis but this time for Q1 1993 to Q4 2002 after the
implementation of new methodology following the Pickford review.
Averagerevision
M1
M3
0.03%
0.11%
M1
M6
0.06%
0.15%
M1
M12
0.06%
0.17%
M1to
M1
M1 Latest
M24
M36 27/3/13
0.06% 0.11%
0.27%
0.20% 0.20%
0.33%
This period showed relatively stable growth and no economic downturns, and included improved
methodology. It is easy to see the improvements in revisions performance, both in the smaller revisions
between M1 and M3, and also the longer term smaller revisions such as the +0.03 percentage points at the
Why is GDP revised?
second Blue Book estimate, compared with +0.18 percentage points that we saw in table 2 over the previous
ten years.
Table 4 brings the analysis up to date and the latest ten year period has seen considerable improvements to
data sources in the short term output indicators such as the Index of Services.
Averagerevision
M1
M3
0.00%
0.12%
M1
M6
0.01%
0.14%
M1
M12
0.03%
0.15%
M1to
Latest
M1
M1
M24
M36 27/3/13
0.00% 0.02%
0.05%
0.23% 0.33%
0.39%
Now the absolute revision without regard for sign across most vintages is either 0.0 percentage points or
slightly negative, showing less of the previous tendency for revisions to be upwards. Of the 40 quarters
published in this period, the revisions between M1 and M3; showed no revision at all in 12 quarters; had
upward revision in 13 quarters and downward revisions 15 quarters. This period showed no evidence at all of
any bias in the M1 to M3 revisions performance.
Table 5 summarises the information above, focussing just on the M1 to M3 revision and the M1 to latest
revision. The improvements in the average revisions since 1992 can be seen. The average revision between
M1 and the latest estimate has fallen from 0.42 percentage points in the period Q1 1983 to Q4 1992 to just
0.05 percentage points in the period Q1 2003 to Q4 2012. More importantly, the period since 2003 shows no
deterioration in revisions performance despite the acknowledged difficulties in measuring GDP during a
sharp economic downturn rather than in a period of steady growth.
Table 5: Revisions to quarterly growth in GDP across all three time spans between M1 and M3, and
between M1 and the latest estimate
M1
M3
M1to
Latest
27/3/13
Averagerevision
Q11983toQ41992
0.10%
0.42%
Q11993toQ42002
0.03%
0.27%
Q12003toQ42012
0.00%
0.05%
Averageabsoluterevisionw/oregardforsign
Q11983toQ41992
0.29%
0.72%
Q11993toQ42002
0.11%
0.33%
Q12003toQ42012
0.12%
0.39%
The tables above also show that, over a longer revisions timescale, the estimate of the quarterly growth in
GDP can be revised as the different considerations highlighted come into play; for instance in table 4 the
average revision over the last ten years changes from -0.02 percentage points at three years (M36) to +0.05
percentage points at the latest estimate (the bulk of which is due to methodological revisions).
One criticism which has been made of the GDP data is that while the average revisions are small in recent
years, during the economic upturn following the 2009 trough GDP growth has been underestimated. It is not
easy to verify or falsify this claim since there has only been the one major upturn in the period since the
implementation of the Pickford review (see previous Why is GDP revised?, Walker et al article for more
details on the Pickford review), which was in the period of 1992/93. Nevertheless, the information in annex D
combined with the summary annual growth rates in annex F provide little evidence to support this claim.
In summary, the revisions shown above can be thought of in three main categories (with some overlap):
1) Typically up to about the first year (M12):
Quarterly sources for the expenditure and income components become more complete and having
the three components can lead to small revisions. The short term income measure is the weakest
and receives little or no weight until the annual benchmarks are received from HMRC, whereas the
Why is GDP revised?
short term expenditure measure is judged to be of a higher quality. Nonetheless, the output measure
continues to be the main driver of the quarterly movements in GDP until Supply and Use balancing
takes place
2) After M12 and up to around M36:
Supply and Use balancing can lead to revisions to annual growth rates
There can be revisions to the quarterly path arising from annual revisions
3) At any point in the process and often many years after initial publication:
New improved methods and sources can change the picture
New international standards and frameworks mean that what we are trying to measure changes
retrospectively.
A database of successive estimates of CVM GDP in million for each quarter since Q1 1955 is published as
part of each GDP release. This database is the basis of a regular analysis of growth rate revisions for the
period since 1992 that is published alongside each GDP release. Users of this revisions information will now
also find alongside it a database of successive estimates of current price GDP in millions back to 1989.
These databases allow transparency and give users the tools to analyse revisions themselves.
The later revisions to growth as implemented in Blue Book are best illustrated in a case study which follows
for the current price annual estimates, but users of GDP data should first be reminded of the long run
revisions performance of GDP as shown in chart 4 below. This chart shows the growth rate of CVM GDP
estimates for a quarter compared with the same quarter a year earlier. Here vintages from first published
right through to the period 60 months later (T + 60) are shown. The period T + 60 is chosen as this equates
to four annual Blue Book revisions and will be sufficient for all data revisions to have been included, leaving
only the definitional and methodological revisions to follow.
13.0%
12.0%
11.0%
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
1960Q1
1961Q4
1963Q3
1965Q2
1967Q1
1968Q4
1970Q3
1972Q2
1974Q1
1975Q4
1977Q3
1979Q2
1981Q1
1982Q4
1984Q3
1986Q2
1988Q1
1989Q4
1991Q3
1993Q2
1995Q1
1996Q4
1998Q3
2000Q2
2002Q1
2003Q4
2005Q3
2007Q2
2009Q1
2010Q4
2012Q3
Chart 4: GDP at basic prices, CVM, percentage growth, quarter on same quarter 1 year ago:
T+3
T+6
T+12
T+24
T+36
T+48
T+60
Why is GDP revised?
In order for a better comparison to be made between the initial growth estimate and the T + 60 month
estimate chart 5 strips out all the intermediate estimates and just focuses on the two periods of T and T + 60.
13.0%
12.0%
11.0%
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
1960Q1
1961Q4
1963Q3
1965Q2
1967Q1
1968Q4
1970Q3
1972Q2
1974Q1
1975Q4
1977Q3
1979Q2
1981Q1
1982Q4
1984Q3
1986Q2
1988Q1
1989Q4
1991Q3
1993Q2
1995Q1
1996Q4
1998Q3
2000Q2
2002Q1
2003Q4
2005Q3
2007Q2
2009Q1
2010Q4
2012Q3
Chart 5: GDP at basic prices, CVM percentage growth, quarter on same quarter 1 year ago, T and T +
60 months:
T+60
Charts 4 and 5 confirm that for the most part GDP revisions are small, and do not on the whole alter the
overall economic history portrayed in the initial growth estimates. However, there is some suggestion that
revisions are larger around turning points eg the mid 1970s, 1979-80, 1988-89 and 1998. The reasons for
revisions in the 1990-92 economic downturn are discussed in annex D.
Some revisions occur to source data, and these will impact primarily on the current price estimates while
some revisions, such as those to deflators or the method of deflation, will impact on the chained volume
measure estimate. Any current price revision will also, through deflation, have an impact on the chained
volume measure. The case study below focuses on one such annual growth rate, for 2003, describing the
causes of revision.
5. CASE STUDY ON VINTAGES OF 2003 ANNUAL CURRENT PRICE GDP REVISIONS

Data for this case study can be found in annex F which shows the recent current price GDP annual growth
rates by Blue Book.
When the first estimate of current price GDP annual growth was published in February 2004 the estimated
growth rate was 5.5%. This was published in the second estimate of GDP for Q4 2003 and at that point was
based on early estimates from the output measure of GDP and some information on expenditure.
This figure was revised down to 5.4% at the QNA estimate for Q4 2003 after further output data were
received and the first estimates of the income approach to GDP were included.
Q1 2004 was the Blue Book consistent QNA for 2004 (as Blue Book was a July publication in 2004 and the
QNA estimate consistent with Blue Book is published one month earlier). There was a further slight
downward revision to 5.3% at this point due to later information to the output measure as, at this point, 2003
would not be balanced on a Supply and Use basis.
Why is GDP revised?
The annual growth remained at 5.3% until the Q3 2004 QNA estimate where it was revised up to 5.5%. At
this point in the quarterly cycle, new information from the Financial Inquiries annual benchmark is usually
implemented and this may have contributed to the upward revision.
Blue Book data were again released as part of the June QNA estimates in 2005. Whenever Blue Book is
published in July it means that it is too early for full information from HMRC to be included for both
compensation of employees and company taxation data. Therefore Blue Book 2005 did not contain detailed
annual income information from HRMC and hence the estimate of annual growth remained unrevised at
5.5% despite the first Supply and Use balance of 2003 annual data taking place.
Blue Book 2006 had a significant number of revisions (described in more detail in annex G); including a full
rebalance of 2003 taking on full income data from HRMC sources for the first time, and a detailed industry
rebalance which hadnt been possible in Blue Book 2005. This led to an upward revision in the annual
growth rate to 5.9%.
There was no revision in Blue Book 2007 but in Blue Book 2008 the major revision was the introduction of
FISIM (Financial Intermediation Services, Indirectly Measured) and the annual growth increased to 6.0%,
where it stayed through Blue Books 2009, 2010 and 2011.
In Blue Book 2012 the growth rate increased to 6.4% following the introduction of new data sources and
improved methodology for measuring the insurance industry (see reference page for a link to the more
detailed article on this).
So this case study shows that initial revisions, even to annual growths as a result of the quarterly round, and
the first one or two Blue Books tend to be small in size, and it is only once the administrative income data are
incorporated in a Blue Book round that the current price GDP numbers can be deemed to be fully balanced.
After the balanced position is obtained with the administrative data it is then possible for further revisions as
and when new methodologies or new international standards are implemented.
6. IS GDP BIASED?
The article published in October 2012, Updated analysis of revisions to quarterly GDP, Walton and Brown,
used Blue Book 2012 published data to investigate whether there was any bias in the revisions between the
preliminary estimate of GDP and the estimates produced several Blue Books later. This work concluded that
while it was too early to have available the GDP revisions between T and T + 60 months in order to fully
analyse the 2008/09 downturn and subsequent recovery, there was some evidence to suggest (based on the
revisions between T and T + 24 months) that the size of revision had increased [although not significantly].
Once the Blue Book 2013 dataset is published on 27 June 2013, ONS will then revisit this issue in order to
produce a single revisions article in the autumn of each year giving all the updated analyses contained in
both the Walker et al article and the Walton and Brown article in a single document.
7. CONCLUSIONS
The analyses in this paper have been updated to include Blue Book 2012 revisions and the latest year of
data. The main conclusions which can be drawn are as follows:
Revisions between the preliminary estimate of GDP and the third estimate published after 13 weeks
continue to be small and unbiased; typically 0.1 or 0.2 percentage points in either direction
This confirms that there is no gain in quality from delaying the preliminary estimate of GDP by one or
two months
Taking different lengths of GDP revisions over different time periods can give a very different picture
of average revisions. Revisions over the period since 2008 have been a little greater than were
experienced previously during the 16 years of relatively stable growth but the period since 2003
shows no deterioration in revisions performance despite the acknowledged difficulties in measuring
GDP during a sharp economic downturn rather than in a period of steady growth
There is some evidence that the assumptions and methods used in compiling the early estimates
that have worked well during the period of stable growth may not hold at turning points, periods
when the economy is growing at rates significantly different from normal or when growth rates are
volatile. These methods arose out of the Pickford review conducted in 1989 and have evolved during
a period without a significant economic downturn until 2008
The downturn of the early 1990s, described in the case study in annex D, shows that during that
economic downturn the initial estimates of quarterly GDP growth were subject to slightly larger
Why is GDP revised?
revisions at the turning points. But this downturn is over 20 years ago and systems, methods and
data sources have all improved significantly since then, making any direct comparison with the
2008/09 downturn very difficult
The majority of any current price GDP revision is due to annual administrative data incorporated
during the Blue Book process rather than updates to the quarterly estimates
Past revisions performance is not necessarily a good guide to future potential revisions as a number
of factors will affect the revisions performance including changing methodology, new international
standards and the position of the UK economy within an economic cycle
In 2009 ONS mounted a work programme to monitor how the latest economic downturn might
impact on the methods. Progress has been reported periodically using a range of articles. The
revisions picture will develop with the publication of the Blue Book 2013 dataset on 27 June.
8. NEXT STEPS
This, and previous papers have identified the need for further work and analysis as follows:
The revisions picture is never really final as methodological and conceptual improvements will
continue to be made. Blue Book 2012 included an improvement in the treatment of insurance to
bring it in line with international best practice. Some more methodological improvements are planned
for Blue Book 2013 and estimates based on the 2010 European System of Accounts will be
introduced in 2014
It would be beneficial to users if revisions could be analysed in terms of why they happened rather
than just relying on "time" to distinguish them. We are looking at the feasibility of doing this although
the period of analysis may have to be shorter than for the present revisions triangles
Monitoring revisions is an important part of the quality assurance process that gives an early
indication that the assumptions made in compiling GDP may no longer hold. We will continue to do
this and use the results to assess the errors associated with each of the components of GDP and
consider the impact this may have on the compilation process
The current method of compiling GDP is recognised internationally as a good method. An

improvement to the methodology might be possible if there were additional or better quarterly
sources for the income measure of GDP and for intermediate consumption in particular. Some
expenditure components might also be improved. However, all these options would require
additional resources in ONS and could place an increased compliance cost burden on business.
Users may be interested in two recent developments in this area; an article detailing progress in the
GDP continuous improvement programme and a consultation document on the National Accounts
and related statistics work plan
The ONS will publish a longer article in the autumn bring together the work of this article and the two
previous articles on Why is GDP revised? and Analysis of revisions to Quarterly GDP into a single
piece, and will also look to develop some international comparisons to put the UK experiences of
GDP revisions into perspective.
Why is GDP revised?
Annex A: SOME BACKGROUND TO NATIONAL ACCOUNTS GROSS DOMESTIC PRODUCT (GDP)

AND THE SUPPLY AND USE APPROACH
Production
Production (or Output) is estimated as the value of the output of goods and services produced, minus the
intermediate inputs used in the production of those goods and services, plus taxes on products minus
subsidies on products. Output less intermediate consumption is known as gross value added (GVA)
Expenditure
Expenditure is estimated as the value of the final expenditure by consumers, non-profit institutions and
government; plus gross capital formation; plus exports of goods and services; minus imports of goods and
services.
Income
Income is estimated as the income earned by individuals and corporations in the production of goods and
services: ie compensation of employees plus gross mixed income plus gross operating surplus; plus taxes
on production and imports; minus subsidies on production.
Supply and Use
Whilst each of the three approaches is attempting to measure the same economic value, the different
sources and the statistical and non-statistical errors associated with these sources means that the totals
arrived at by the three measures are not consistent. The Supply and Use framework represents a structure
that enables you to confront these sources in a coherent way, with the aim of achieving a single measure of
GDP.
More information
Further information is included in "UK National Accounts - a short guide", published on 1 August 2012 which
can be linked from this page:
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/methodologyand-articles/2011-present/index.html
Why is GDP revised?
Annex B: BACKGROUND TO THE COMPILATION OF GROSS DOMESTIC PRODUCT

Introduction to compiling GDP
In common with other countries, and following methods and principles agreed by international statistical
bodies, the UK National Accounts are built up from a variety of surveys and administrative sources, which
measure activity in the economy in different ways. In particular, GDP can be measured in terms of three
distinct approaches: production, expenditure and income. The sources used in compiling the National
Accounts are shown in annex C.
In understanding the nature of revisions to GDP and their source, it is helpful to have in mind the framework
and timetable for publishing successively improved estimates. Broadly, the main steps are:
preliminary estimates are published shortly after the end of the quarter to which they relate, largely
based on partial output information
second and third estimates are published one and two months later, respectively, based on fuller
output information but presenting evidence from expenditure and income sources
estimates are further refined in the annual "Blue Book" after application of Supply and Use table
balancing at detailed sector and product level.
These steps are described more fully in the following sections.
Preliminary Estimate
In the UK the first or preliminary estimate of GDP in a particular quarter is published just three and a half
weeks after the end of the quarter and is one of the fastest in the world. This estimate is based exclusively
on output data. No information on the income or expenditure measure is available in this timescale and
indeed, there is no information on intermediate consumption. The assumption therefore is that changes in
output are a good proxy in the short-term for value added, that is changes in intermediate consumption are
the same as changes in output. Further, the preliminary quarterly estimates of output are based on the
monthly indicators that are published for each of the three main industrial sectors of the economy
(production, services and construction). At the time of publication of the preliminary estimate, estimates of
the first two months of the quarter are available for many industries but the estimate of the quarter includes a
nowcast of the third month of the quarter, based on recent trends refined by the early returns from
businesses. For some industries however, the short term estimate of GDP is based on a quarterly indicator,
which typically has to be nowcast at the time of the preliminary estimate. Overall, the preliminary estimate
contains around 44% of real data content by weight, a figure that rises to 83% by the time of the second
estimate and 92% by the third publication.
Second estimate and Quarterly National Accounts (third estimate)
The aim of the quarterly balancing and adjustment process is to reduce inconsistencies in the accounts and
to come to a firm view on movements in key aggregates. The published accounts show all three approaches
with similar movements and levels with credible explanations for movements in components. The current
ONS judgement is that generally in the short term the output approach gives the best estimate of growth in
GDP. This judgement is in part based upon the availability of source data for the various components of the
output, expenditure and income measures. To achieve this balance, ONS:
scrutinises the initial estimates of each component from the source data
applies judgmental adjustments to the estimates based on an assessment of the quality of those
sources
applies explicit alignment adjustments to components of expenditure (changes in inventories) and

income (gross operating surplus of private non-financial corporations) as these components are
judged to have the widest error margins. (Alignment adjustments are made to sum to zero for a
calendar year where all four quarters have been published).
The results of this quarterly balancing process coupled with an explicit statistical discrepancy to account for
residual differences in years since the latest year in which there are balanced Supply and Use tables
provides a solution to the discrepancies in the different measures of GDP by putting forward the most
coherent estimates that arise from the integrated accounts.
Why is GDP revised?
Balanced Supply and Use tables

Supply and Use tables (SUTs) provide the framework that ensures, for any "balanced year" the estimates of
industry outputs, inputs and value added are confronted and a single picture of the industry produced. SUTs
are currently published for 110 industries and products based on the 2007 Standard Industrial Classification
for years 1997 to 2010. 2011 will be balanced for the first time in Blue Book 2013. Producing SUTs allows an
examination of consistency and coherence of national accounts components within a single detailed
framework and, by incorporating the components of the three approaches to measuring GDP, enables a
single estimate of GDP to be determined. The current methodological approach to determining GDP is
based on the assertion that, for years where SUTs have been produced, GDP should be set at the level
derived from the balance. For subsequent periods, this level is carried forward using short term movements
in components according to the quarterly balancing process described above. More details of the data
sources for the different components of GDP are provided in annex C.
Balancing SUTs is currently an annual exercise that is based on annual sources of data. That is, there is no
additional information about the quarterly movements in GDP that comes from producing the SUTs.
However, constraining the quarterly path of a component that comes from the short term sources to the
annual level that comes from balancing the annual sources can often be challenging, particularly when
successive "benchmarks" are taking the estimates in opposite directions. This was particularly true in 2008
and 2009, where the SUTs suggested that the 2008 level of GDP was lower than previously thought but that
2009 was higher. Constructing a quarterly path through those two years has been, and remains, a particular
challenge.
Why is GDP revised?
Annex C: SOURCES USED IN COMPILING ESTIMATES OF GDP

Preliminary Estimate - Output based
Output Industry
Organisation
Department
for
Environment, Food and
Agriculture, forestry and fishing
Rural Affairs
Forestry Commission
Department for Business, Innovation
Mining and quarrying
and Skills
ONS Monthly Business Survey:
Manufacturing
except, Refined Petroleum from
and Skills and
Iron and Steel from the Iron and Steel
Statistics Bureau
Electricity, gas, steam and air conditioning supply
and Skills
ONS Monthly Business Survey
Water supply; sewerage, waste management and remediation
activities
Construction
Wholesale and retail trade; repair of motor vehicles and
ONS Retail Sales Index
motorcycles
Rail Transport - Office of Rail
Transportation and Storage
Regulation
Water Transport - ONS International
Passenger Survey and Department for
Transport
Air Transport - Civil Aviation Authority
ONS - Monthly Business Survey all
others
Accommodation and food service activities
Information and communication
ONS Financial Inquiries
Financial and Insurance activities
Association of British Insurers
London Stock Exchange
Investment Management Association
Association of Investment Companies
ONS Household Final Consumption
Real Estate Activities
Expenditure
ONS Short Term Employment Survey
Professional, scientific and technical activities
Administrative and support service activities
Civil Service Statistics Yearbook
Public administration and defence; compulsory social security
ONS Public Sector Employment
Education
Independent Schools Information
Services
Human health and social work activities
ONS General Government data
Arts, entertainment and recreation
ONS Household Final Consumption
Expenditure
ONS Public Sector Employment
Other service activities
and Skills
Activities of households as employers; undifferentiated goods- ONS Household Final Consumption
Expenditure
and services- producing activities of households for own use
Why is GDP revised?
Quarterly Balancing
Organisation
Data sources as at Preliminary
GDP above
ONS Retail Sales Inquiry,
forecasts
Her Majesty's Treasury,
forecasts
ONS Capital Expenditure
Survey
Inventories
ONS Stocks Survey
Trade in Goods
Her Majesty's Revenue and
Customs and Intrastat
Trade in Services
ONS International Passenger
Survey and
ONS International Trade in
Services, forecasts
Gross Operating Surplus of Private ONS Quarterly Profits Inquiry,
Non-financial Corporations
forecasts
Gross Operating Surplus of
Bank of England
Financial Corporations
Compensation of Employees
ONS Average Weekly Earnings
ONS Work Force Jobs
GDP component
Index of Production and Index of
Services
Household Final Consumption
Expenditure
Government Final Consumption
Expenditure
Gross Fixed Capital Formation
GDP measure
Output
Expenditure
Expenditure
Expenditure
Expenditure
Expenditure
Expenditure
Income
Income
Income
Main Annual Sources Used For Supply And Use Balancing

GDP measure
Organisation
GDP measure
GDP Production approach
ONS Annual Business Survey
Output
ONS PRODCOM survey
Output
ONS Purchases' Inquiry
Output
Output
Services
Department for Environment,
Output
Food and Rural Affairs
Civil Aviation Authority
Output
Department of Health
Output
Bank of England
Output
GDP Income approach
Income
Customs income data
Bank of England
Income
ONS Quarterly Profits Inquiry
Income
ONS Public Corporations'
Income
Survey
Her Majesty's Treasury data
GDP Expenditure approach
ONS Living Costs and Food
Expenditure
Survey
Expenditure
Expenditure
Services
Government internal accounting
Expenditure
systems
Expenditure
Customs
ONS Trade in Goods
ONS Quarterly Capital
Expenditure
Expenditure Survey
ONS Annual Business Survey
Expenditure
investment data
ONS Construction data
Expenditure
Why is GDP revised?
Annex D: CASE STUDY OF THE PROFILE OF THE EARLY 1990S ECONOMIC DOWNTURN
During periods of economic stability, when quarter on quarter GDP growth is steady and positive the
assumptions and forecasts used within standard National Accounts methodology hold up well to scrutiny.
However, during the period of an economic downturn and recovery there is a theory that the methodologies
used may overstate GDP during the downturn and then understate GDP during the recovery phase. In simple
terms this means the negative growth numbers are made more negative over subsequent revisions, and the
small positive growths seen in the recovery stage later become larger positives.
It is too early to get the full picture of the revisions performance of the 2008/09 economic downturn, but we can
look back at the economic downturn of the early 1990s with the hindsight of many years of subsequent
revisions data.
The following series of graphs and commentary look at the 1990s economic downturn and recovery as it
happened, initially through subsequent releases of the preliminary estimate of GDP and then the annual
revisions as each successive Blue Book update was published. It may help users to have in mind the reasons
for Blue Book revisions as detailed in annex G while reading the following sections.
Initial estimates of the Q3 1990 decline stayed consistent through the first three quarterly revisions. The Q2
1991 estimate did revise the Q1 1991 figure lower, but at this stage the general shape of the decline has
remained broadly similar.
Chart 6: The 1990-93 economic downturn and recovery, GDP levels fixed at Q1 1990 level
million
107,000
1990Q2
1990Q3
105,000
1990Q4
1991Q1
1991Q2
103,000
101,000
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
The next four quarters of new data and revisions are shown in colours, while the vintages already explained in
previous graphs are turned to shades of grey. When Q3 1991 was first published there was a rise of 0.1%
quarter on quarter, although Q4 1991 was then published with a negative figure showing that the UK was not
out of the downturn quite yet. The Q3 1991 estimate then became +0.2% during the Q1 1992 publication
which also showed a decline of 0.8% in growth between Q4 1991 and Q1 1992. Blue Book 1992 reinforced
this pattern at a slightly lower level.
Why is GDP revised?
million
107,000
1990Q2
1990Q3
1990Q4
1991Q1
1991Q2
1991Q3
1991Q4
1992Q1
BB1992
105,000
103,000
101,000
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
The publication in 1992 Q3 did not change the profile, but gave a positive end quarter of +0.1%. On the
graph below Q4 1992 is exactly hidden under the Q1 1993 line, and both quarters revised up the start of the
recovery to +0.2% in Q3 1992. At this point the peak to trough of the downturn was -4.3%. Blue Book 1993
then increased the pace of recovery out of the downturn, but also revised the peak to trough to -4.1% and
turned Q3 1991 from +0.3% to -0.1%.
million
107,000
1990Q2
1990Q3
1990Q4
105,000
1991Q1
1991Q2
1991Q3
103,000
1991Q4
1992Q1
101,000
BB1992
1992Q3
1992Q4
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
1993Q1
BB1993
Why is GDP revised?
Blue Book 1994 and the subsequent three Blue books from 1995 to 1997 all show a very similar pattern
which is at a higher level, making the downturn shallower. The peak to trough at Blue Book 1997 was -3.6%.
million
107,000
105,000
103,000
101,000
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
1990Q2
1990Q3
1990Q4
1991Q1
1991Q2
1991Q3
1991Q4
1992Q1
BB1992
1992Q3
1992Q4
1993Q1
BB1993
BB1994
BB1997
Blue Book 1998 then introduced a major series of methodological changes as part of the move from the
European System of Accounts 1979 (ESA79) to ESA 1995. This increased the level of GDP and led to the
peak to trough being revised to -2.8%.
Blue Book 2001 saw a major series of revisions, as described in annex G, which had the combined effect of
revising growth upwards from 1991 onwards and making the peak to trough -2.5%.
million
109,000
107,000
105,000
103,000
101,000
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
1990Q2
1990Q3
1990Q4
1991Q1
1991Q2
1991Q3
1991Q4
1992Q1
BB1992
1992Q3
1992Q4
1993Q1
BB1993
BB1994
BB1997
BB1998
BB2000
BB2001
Why is GDP revised?
Blue Books 2002, 2003, 2004 and 2005 all showed a similar pattern and gave rise to small revisions on the
way out of the downturn but did not alter the picture on the way into the downturn, again increasing growth in
GDP from 1992 onwards, and revising the peak to trough to -2.4%.
million
109,000
107,000
105,000
103,000
101,000
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
1990Q2
1990Q3
1990Q4
1991Q1
1991Q2
1991Q3
1991Q4
1992Q1
BB1992
1992Q3
1992Q4
1993Q1
BB1993
BB1994
BB1997
BB1998
BB2000
BB2001
BB2003
BB2004
BB2005
Blue Books 2006-2008 were relatively unrevised for these periods, except for Blue Book 2007 which saw the
introduction of improved estimates of private investment in own-account computer software, and while the
revisions didnt impact on the downturn and immediate recovery, they did reduce slightly the level of GDP in
Q4 1993.
million
109,000
107,000
105,000
103,000
101,000
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
1990Q2
1990Q3
1990Q4
1991Q1
1991Q2
1991Q3
1991Q4
1992Q1
BB1992
1992Q3
1992Q4
1993Q1
BB1993
BB1994
BB1997
BB1998
BB2000
BB2001
BB2003
BB2004
BB2005
BB2006
BB2007
BB2008
Blue Books 2009 and 2010 have not been included on the next graph as they had no revisions before 1997,
and there were only minor revisions in Blue Book 2011 to these periods as well. Blue Book 2012 saw larger
Why is GDP revised?
revisions to this period as a result of taking on the revision to deflation methods and using components of the
consumer price indices to deflate rather than the retail price indices for the period pre-1997. The peak to
trough still stands at -2.4%.
million
109,000
107,000
105,000
103,000
101,000
1993Q4
1993Q3
1993Q2
1993Q1
1992Q4
1992Q3
1992Q2
1992Q1
1991Q4
1991Q3
1991Q2
1991Q1
1990Q4
1990Q3
1990Q2
1990Q1
99,000
1990Q2
1990Q3
1990Q4
1991Q1
1991Q2
1991Q3
1991Q4
1992Q1
BB1992
1992Q3
1992Q4
1993Q1
BB1993
BB1994
BB1997
BB1998
BB2000
BB2001
BB2003
BB2004
BB2005
BB2006
BB2007
BB2008
BB2009
BB2010
BB2011
BB2012
Conclusions
Initial estimates of the 1990s economic downturn were accurate through the downwards movements of 1990
and 1991 and this period has remained relatively unrevised through subsequent Blue Book publications. The
recovery phase seems to have been revised by a slightly larger amount and generally in a positive direction,
suggesting that initial estimates were less able to accurately pick up the recovery phase until more data were
available.
Of course, this is only one economic downturn, and it was over twenty years ago. Systems, methods and
data sources have all changed considerably over the intervening period and it is impossible to say with any
certainty that history might repeat itself when it comes to the 2008/09 downturn.
Why is GDP revised?
Annex E: REVISIONS TO GDP - UNDERLYING DATA
BlueBookquarters BalancedyearsuptoQ42010
M1
1998Q1
1998Q2
1998Q3
1998Q4
1999Q1
1999Q2
1999Q3
1999Q4
2000Q1
2000Q2
2000Q3
2000Q4
2001Q1
2001Q2
2001Q3
2001Q4
2002Q1
2002Q2
2002Q3
2002Q4
2003Q1
2003Q2
2003Q3
2003Q4
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007
2007
2007
2007
2008
2008
2008
2008
2009
2009
2009
2009
2010
2010
2010
2010
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
M3
1.0%
0.5%
0.4%
0.2%
0.0%
0.5%
0.9%
0.8%
0.5%
0.9%
0.7%
0.3%
0.4%
0.3%
0.5%
0.0%
0.1%
0.9%
0.7%
0.4%
0.2%
0.3%
0.6%
0.9%
0.6%
0.9%
0.4%
0.7%
0.6%
0.4%
0.4%
0.6%
0.6%
0.8%
0.7%
0.8%
0.7%
0.8%
0.8%
0.6%
0.4%
0.2%
0.5%
1.5%
1.9%
0.8%
0.4%
0.1%
0.2%
1.1%
0.8%
0.5%
0.8%
0.5%
0.4%
0.1%
0.1%
0.6%
0.8%
0.8%
0.5%
0.9%
0.7%
0.4%
0.5%
0.4%
0.5%
0.0%
0.1%
0.6%
0.9%
0.4%
0.1%
0.6%
0.8%
0.9%
0.7%
0.9%
0.5%
0.7%
0.4%
0.5%
0.4%
0.6%
0.7%
0.7%
0.7%
0.7%
0.7%
0.8%
0.7%
0.6%
0.3%
0.0%
0.6%
1.6%
2.4%
0.6%
0.2%
0.4%
0.3%
1.2%
0.7%
0.5%
Absolute
Average
Latest
Total
(27/3/13) Revision M1M3 M1M3
0.8%
0.1%
0.2%
0.2%
0.7%
0.3%
0.0%
0.0%
0.6%
0.2%
0.0%
0.0%
0.9%
0.7%
0.1%
0.1%
0.5%
0.6%
0.2%
0.2%
0.3%
0.2%
0.1%
0.1%
1.7%
0.8%
0.1%
0.1%
1.3%
0.6%
0.0%
0.0%
1.0%
0.4%
0.0%
0.0%
1.4%
0.5%
0.0%
0.0%
0.3%
0.4%
0.0%
0.0%
0.2%
0.1%
0.1%
0.1%
1.3%
0.9%
0.0%
0.0%
0.7%
0.3%
0.1%
0.1%
0.5%
0.0%
0.0%
0.0%
0.4%
0.3%
0.0%
0.0%
0.4%
0.3%
0.0%
0.0%
0.8%
0.1%
0.3%
0.3%
0.8%
0.1%
0.2%
0.2%
0.9%
0.5%
0.0%
0.0%
0.6%
0.4%
0.1%
0.1%
1.2%
0.9%
0.3%
0.3%
1.2%
0.6%
0.2%
0.2%
1.2%
0.3%
0.0%
0.0%
0.7%
0.1%
0.1%
0.1%
0.2%
0.7%
0.0%
0.0%
0.0%
0.4%
0.1%
0.1%
0.6%
0.1%
0.0%
0.0%
0.6%
0.0%
0.2%
0.2%
1.2%
0.8%
0.1%
0.1%
0.8%
0.4%
0.0%
0.0%
1.1%
0.5%
0.0%
0.0%
0.5%
0.1%
0.1%
0.1%
0.3%
0.5%
0.1%
0.1%
0.2%
0.5%
0.0%
0.0%
0.9%
0.1%
0.1%
0.1%
1.1%
0.4%
0.0%
0.0%
1.2%
0.4%
0.0%
0.0%
1.2%
0.4%
0.1%
0.1%
0.2%
0.4%
0.0%
0.0%
0.1%
0.3%
0.1%
0.1%
0.9%
1.1%
0.2%
0.2%
1.8%
1.3%
0.1%
0.1%
2.1%
0.6%
0.1%
0.1%
1.5%
0.4%
0.5%
0.5%
0.2%
0.6%
0.2%
0.2%
0.4%
0.8%
0.2%
0.2%
0.4%
0.3%
0.3%
0.3%
0.6%
0.4%
0.1%
0.1%
0.7%
0.4%
0.1%
0.1%
0.6%
0.2%
0.1%
0.1%
0.4%
0.1%
0.0%
0.0%
Revisionbetween
M1andM3
Revision
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
+0.1%
+0.2%
+0.3%
Count
1
0
1
3
10
21
9
5
2
Revisionbetween
M1andLatest
Revision
<0.5%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
+0.1%
+0.2%
+0.3%
+0.4%
+0.5%
>+0.5%
Count
4
2
4
1
2
5
2
4
1
6
8
3
10
Why is GDP revised?
Annex F: ANNUAL GDP GROWTH RATES FOR CURRENT PRICE AND CVM ESTIMATES
Current price annual GDP growth rates by Blue Book
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
BB00
6.5%
5.7%
4.6%
BB01
6.4%
6.0%
4.8%
4.7%
BB02
6.4%
6.0%
5.0%
5.3%
4.0%
BB03
6.2%
6.0%
5.2%
5.2%
4.5%
5.0%
BB04
6.2%
6.0%
5.2%
5.2%
4.6%
5.0%
5.3%
BB05
6.2%
6.2%
5.2%
5.3%
4.5%
5.2%
5.5%
5.3%
BB06
6.0%
6.1%
5.3%
5.1%
4.6%
5.2%
5.9%
6.0%
4.1%
BB07
6.1%
6.1%
5.3%
5.2%
4.6%
5.2%
5.9%
5.9%
4.2%
5.3%
BB08
6.2%
5.9%
5.6%
5.1%
4.6%
5.3%
6.0%
5.3%
4.3%
5.5%
6.0%
BB09
6.2%
5.9%
5.6%
5.1%
4.6%
5.3%
6.0%
5.5%
4.2%
5.7%
5.5%
3.4%
BB10 BB11 BB12

6.2% 6.2% 6.0%
5.9% 5.9% 5.6%
5.6% 5.7% 5.3%
5.1% 5.1% 4.9%
4.6% 4.6% 4.6%
5.3% 5.3% 4.8%
6.0% 6.0% 6.4%
5.5% 5.5% 5.6%
4.2% 4.3% 5.2%
5.9% 5.9% 5.6%
5.8% 5.8% 5.9%
2.9% 2.0% 2.0%
3.7% 2.8% 2.7%
4.6% 4.6%
3.4%
BB06
3.0%
3.3%
3.0%
3.8%
2.4%
2.1%
2.7%
3.3%
1.9%
BB07
3.1%
3.4%
3.0%
3.8%
2.4%
2.1%
2.8%
3.3%
1.8%
2.8%
BB08
3.3%
3.6%
3.5%
3.9%
2.5%
2.1%
2.8%
2.8%
2.1%
2.8%
3.0%
BB09
3.3%
3.6%
3.5%
3.9%
2.5%
2.1%
2.8%
3.0%
2.2%
2.9%
2.6%
0.7%
BB10
3.3%
3.6%
3.5%
3.9%
2.5%
2.1%
2.8%
3.0%
2.2%
2.8%
2.7%
0.1%
4.9%
CVM annual GDP growth rates by Blue Book
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
BB00
3.5%
2.6%
2.1%
BB01
3.4%
3.0%
2.1%
2.9%
BB02
3.4%
2.9%
2.4%
3.1%
1.9%
BB03
3.3%
3.1%
2.8%
3.8%
2.1%
1.7%
BB04
3.3%
3.1%
2.9%
3.9%
2.3%
1.8%
2.2%
BB05
3.2%
3.2%
3.0%
4.0%
2.2%
2.0%
2.5%
3.2%
BB11 BB12
3.4% 3.9%
3.8% 3.5%
3.7% 3.2%
4.5% 4.2%
3.2% 2.9%
2.7% 2.4%
3.5% 3.8%
3.0% 2.9%
2.1% 2.8%
2.6% 2.6%
3.5% 3.6%
1.1% 1.0%
4.4% 4.0%
1.8% 1.8%
0.8%
Why is GDP revised?
Annex G: THE MAJOR CAUSES OF REVISION BY BLUE BOOK

Blue Book 2001 Featured major revisions, including new information on sales by manufacturers to final
consumers back to 1986, revisions to Producer Prices Indices (PPIs) for computers, from 1996 onwards.
Reallocations of income between sectors following methods changes, reviewed allocation of self-employment
income, rental income also now in mixed income, and revisions to operating surplus of insurance corporations
included within financial corporations' operating surplus.
Blue Book 2002 - No revisions pre 1996 and very closed in terms of revisions.
Blue Book 2003 A full Supply and Use table rebalance back to 1996. Introduction of annual chain-linking and
moved from 1995 to 2000 for referencing. Also revised up imports of goods back to 1999 to adjust for impact
of VAT Missing Trader Intra-Community (MTIC) fraud.
Blue Book 2004 - Rebalance of 2001 and balanced 2002 for the first time. Reclassified NHS trusts from public
corporation sector to central government sector back to 1991. Referenced from 2000 to 2001 and introduced a
new method for estimating the output of government health services back to 1996 in CVMs.
Blue Book 2005 - Rebalance of 2002 and balanced 2003, with the reference year moved from 2001 to 2002.
Current price revisions back to 1991 for improving the recording of private pension contributions and receipts,
and for CVM GDP there was a new methodology for the estimation of government education and social
protection from 1996 onwards. Also improved the allocation of central government consumption to reflect
machinery of government changes from 1996 onwards in CVMs.
Blue Book 2006 - Full rebalance for 2003 and balanced 2004, with specific current price revisions to earlier
years, mainly to apportion adjustments across industries which wasn't completed in BB 2005. Reference year
moved from 2002 to 2003.
Blue Book 2007 - closed to all revisions except for revisions to estimates for private investment in own-account
computer software back to the 1970s which increased current price levels. No Supply and Use rebalance of
2004, and no balance of 2005. Reference year unchanged.
Blue Book 2008 FISIM (Financial Intermediation Services, Indirectly Measured). For Supply and Use tables
there was a rebalance of 2004, with 2005 and 2006 balanced for first time. Reference year unchanged.
Blue Book 2009 - Rebalance of 2004 - 2006 and balanced 2007 for first time and moved from 2003 to 2005 as
reference year.
Blue Book 2010 - Rebalance of 2006 - 2007 and balanced 2008 for first time and moved from 2005 to 2006 as
reference year.
Blue Book 2011 - Introduction of SIC 2007, CORD systems and replacing RPI with CPI to deflate key
expenditure and output components (Back to 1997 only). Reference year moved from 2006 to 2008.
Blue Book 2012 - Insurance revisions to clear GNI reservation taken back to 1987, deflator changed from RPI
to CPI pre-1997 to start of GDP series. Reference year moved from 2008 to 2009.
Why is GDP revised?
REFERENCES
1.
The revisions policy covering the National Accounts, including estimates of GDP
http://www.ons.gov.uk/ons/guide-method/revisions/revisions-policies-by-theme/economy/national-accountsrevisions-policy.pdf
2.
More detail on Supply and Use tables structure
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/input-output/input-output-supplyand-use-tables-structure-overview.pdf
3.
Revisions triangles and real time GDP databases
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/gdp-revisionstriangles-and-real-time-database/index.html
4.
Blue Book 2012: Improvements to the measurement of Insurance Services
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/articles/2011present/blue-book-2012-insurance-services/index.html
5.
Content of UK National Accounts: Blue Book 2013 (published on 30 November 2012)
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/articles/2011present/blue-book-2013-scope-article.pdf
6.
Various National Accounts articles, including "National Accounts: A short guide"
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/methodologyand-articles/2011-present/index.html
7.
Understanding the quality of early estimates of GDP, 25 November 2009
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/articles/20062010/index.html
8.
Updated analysis of revisions to quarterly GDP, Walton and Brown
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/nationalaccounts/articles/updated-analysis-of-revisions-to-quarterly-gdp.pdf
9.
Why is GDP revised?, Walker et al
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/articles/2011present/why-is-gdp-revised-/why-is-gdp-revised----download.pdf
10.
GDP continuous improvement programme update
http://www.ons.gov.uk/ons/guide-method/method-quality/ons-statistical-continuous-improvement/continuousimprovement-of-gdp--24-april-2013/index.html
11.
Consultation on the National Accounts and related statistics work plan
http://www.ons.gov.uk/ons/about-ons/user-engagement/consultations-and-surveys/consultations/nationalaccounts-and-related-statistics-work-plan/index.html

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