Britain’s statisticians fix a blunder and find a bigger economy
recent economic history. Previously its data had shown the economy, at the end of 2021, to be still 1.2% below its pre-pandemic size. Now it reports that national output at the time was in fact 0.6% higher.
As the government has been quick to point out, the revisions require a rethink of Britain’s performance. For much of the past two years Britain had seemed to be a laggard, with the weakest growth of any G7 rich economy. Now the record looks more respectable.
Britain has been outgrowing Germany and just about matched the pace of France (see chart). GDP numbers are always subject to revision as more information emerges. They should, in theory, grow more accurate as time passes.
The latest update marks a large absolute adjustment, but is not unusual in proportion to the underlying changes in GDP to which it relates. The magnitude of the swings in national output in 2020 and 2021 was without precedent. For that reason, proportionally normal revisions mean big changes in the headline figures.
Even without the wild gyrations in GDP, the pandemic was a tricky time for compiling data. For example, with many workers trapped at home, firms did not make it a priority to fill in forms for official statisticians. One big adjustment concerns stockpiling.
The ONS now reckons that in 2020 companies were adding to their piles of unsold stocks, not running them down. That inventory build-up meant that the reported fall in GDP was less severe than first thought: 10.4% rather than 11%. More significantly, growth in 2021 has been notched up from 7.6% to 8.7%.
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