Estimating current price GVA and GDP for Scotland

Sandy Stewart

OCEA

Overview of presentation

• Experimental Statistics – Work in Progress• Building on exercise for GERS 06-07• UK Starting Point – NA definitions• Regional Accounts – Gross Value Added• Calculation of Gross Domestic Product• Taxes less Subsidies on Products• Treatment of Extra Regio• Further Considerations

UK starting point

• UK quarterly National Accounts

• UK GVA, GDP, Taxes on Products and Subsidies on Products – Not Seasonally Adjusted – figures as “raw” as possible.

• Frozen snapshot at 2007 Q2 – consistent with Blue Book 2007

• Detailed breakdown of taxes and subsidies on products

Scottish starting point

• Regional Accounts GVA

• Problem – Regional Accounts (and National Accounts) not balanced since 2004 – treatment of statistical discrepancy

• Use raw (unsmoothed) estimates of GVA in preference to headline (smoothed) GVA

• Accuracy of GVA (I) – too much emphasis on compensation of employees.

Gross Domestic Product

Gross Value Added at basic prices

plus Taxes on products

Less Subsidies on products

equals Gross Domestic Product at market prices

Taxes on Products

• VAT (59%) – apportion by household consumption, EFS, ONS

• Fuel duties (15%) – apportioned by proportion of road traffic fuel consumption, BERR

• Tobacco duties (8%) - apportion by household consumption, EFS, ONS

• Stamp duties (5%) – land and property stamp duty: HMRC ; stocks and shares, FRS,DWP

• Others – various – see paper

Subsidies on Products

• Central government subsidies apportioned by Regional Accounts GVA – housing, transport, coal, electricity, recreation and economic affairs by total GVA; agriculture, construction and health by sectoral GVA

• Local government subsidies – use figures supplied by SG for National Accounts

• More work required – especially on Agriculture – note reclassification from subsidies on products to subsidies on production in 2005-06.

Scottish onshore GVA and GDP

60

65

70

75

80

85

90

95

100

105

110

1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

£ b

illi

on GVA

GDP

pro rata GDP

Extra Regio

• Two components – Continental Shelf activity (95%), and Public Administration and Defence (5%).

• Two methods of apportionment – CS and PAD by population– CS by geography and PAD by population

• Research by Kemp and Stephen (see GERS 2006-07)

• No taxes or subsidies on products in Extra Regio

Scottish GVA and GDP - ER assumptions

0

20

40

60

80

100

120

140

1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

£ b

illio

n

GVA

GDP

pop ER - GDP

geog ER - GDP

Considerations

• Consider build-up of annual figures from quarterly data

• Consumption-based or production-based apportionment

• Use of raw, not headline or SA, figures• Quality of income-based GVA (Regional

Accounts)• Future corrections, balances and re-

classifications – large revisions.