GDP

ross Domestic Product (GDP) is an integral part of the UK national accounts and provides a measure of the total economic activity in a region. GDP is often referred to as one of the main ‘summary indicators’ of economic activity and references to ‘growth in the economy’ are quoting the growth in GDP during the latest quarter.

In the UK three different theoretical approaches are used in the estimation of one GDP estimate. GDP from the output or production approach – GDP (O) measures the sum of the value added created through the production of goods and services within the economy (our production or output as an economy). This approach provides the first estimate of GDP and can be used to show how much different industries (for example, agriculture) contribute within the economy.

GDP from the income approach – GDP (I) measures the total income generated by the production of goods and services within the economy. The figures provided breakdown this income into, for example, income earned by companies (corporations), employees and the self-employed. GDP from the expenditure approach – GDP (E) measures the total expenditures on all finished goods and services produced within the economy.

The estimates are ‘Gross’ because the value of the capital assets actually worn away (the ‘capital consumption’) during the productive process has not been subtracted. Estimates for GDP cover calendar years and quarters and the publication dates are available well in advance. Annual estimates are published in late summer as part of the UK National Accounts. Quarterly estimates are published more frequently and are updated with more information as it becomes available each month.

For example, GDP estimates for the first quarter of the year – Q1: January, February and March – will become available:

• 1st Estimate: Preliminary estimate of GDP – based on information on output – published 3.5 weeks after the end of the quarter. Provides the first estimate of growth in GDP.
• 2nd Estimate: Output Income and Expenditure – based on information from all approaches – published eight weeks after the end of the quarter. Provides information on the level of GDP as well as the growth in GDP.
• 3rd Estimate: UK National Accounts – the full national accounts – published 12 weeks after the end of the quarter.