UK economy grew more than thought in 2011 and 2012 - ONS

Wednesday 03 September 2014 13.09
UK's ONS has published new estimates of gross domestic product from 1998 to 2012
UK's ONS has published new estimates of gross domestic product from 1998 to 2012

Britain's economy has grown at a stronger rate than previously estimated over the last few years, according to new figures that could be a boost for Britain's government ahead of elections next year. 

The Office for National Statistics is revamping how it calculates the size of Britain's economy, and today published new estimates of gross domestic product from 1998 to 2012. 

The revisions, which reflect European Union-wide changes to national accounts, show the economy grew more strongly than thought in the years after Britain's coalition government came to power in 2010. 

The ONS now estimates the economy grew 1.6% in 2011 compared with its previous estimate of 1.1%. 

In 2012, the economy grew 0.7% compared to 0.3% previously estimated.foreign direct investment. 

Britain's finance ministry said the new figures could mean the economy was now around 2.7% larger than its pre-financial crisis peak, instead of the 0.2% currently estimated. 

"These ONS revisions show an economy that has been growing more strongly than previously thought, with almost every quarter under this government being revised upward," a finance ministry spokesman said. 

The ONS said the broad picture since 1998 had not changed much because of the revisions. 

"Although the 2008-2009 downturn was less deep than previously estimated and subsequent growth stronger, it remains the case that the UK experienced the deepest recession since ONS records began in 1948 and the subsequent recovery has been unusually slow," said Joe Grice, the ONS chief economist. 

The revisions reflect EU-wide changes in what is considered the best way to represent the size of the economy - for example, by treating corporate research as output rather than a cost. They also include more eye-catching changes, such as estimates of the activity of prostitutes and drug dealers.

While the revisions raised the level of GDP between 1998 and 2012 by an average of around £50 billion a year at current prices, the annual average growth rate was little changed at 2% - or 0.1% higher than before. 

The ONS also announced revisions to Britain's balance of payments from 1997 to 2009. It said the changes were small apart from 2008 and 2009 - at the height of the financial crisis. 

The current account deficit widens significantly for these years because of changes to the way banks' profits are included in foreign direct investment.