Page 30 - Industrial Technology EXTRA - Brexit Briefing

GDP QUARTERLY NATIONAL ACCOUNTS

Q3: JULY TO SEPTEMBER 2020

A record increase in GDP through Q3, revised up from earlier estimates, reflects a
recovery of activity following the record contraction in Q2, but is still below 2019

UK gross domestic product (GDP) is FIG 1. REAL GDP INCREASED BY A REVISED 16.0% IN Q3
estimated to have increased by 16.0% in
Quarter 3 (July to Sept) 2020, revised from
the first estimate of 15.5% growth. This is the
largest quarterly expansion in the UK
economy since Office for National Statistics
(ONS) quarterly records began in 1955. This
reflects the effects of the easing of lockdown
restrictions in the third quarter as well as
some recovery of activity from the steep
contraction in April (Figure 1).

These revised estimates show that the
cumulative fall in GDP in the first half of 2020
was 21.2%, compared with the previous
estimate of a 21.8% cumulative fall, as the UK
economy contracted by 3.0% in Quarter 1 FIG 2. IMPLIED GDP DEFLATOR FELL BY A REVISED 2.2% IN Q3
(Jan to Mar) followed by a decline of 18.8%
in the second quarter (Apr to June). The level
of UK GDP in the third quarter was 8.6%
below where it was prior to the coronavirus
(Covid-19) pandemic at the end of 2019,
revised from the previous estimate of being
9.7% lower. Compared with the same quarter
a year ago, the UK economy fell by a revised
8.6%.

In line with the National Accounts Revisions
Policy, all quarters from Quarter 1 (Jan to
Mar) 2019 onwards are open for revision.
The revisions made in this publication reflect
a variety of factors, including new survey
data, new Value Added Tax (VAT) turnover
data and updates to seasonal factors. More
information can be found in the Revisions to
GDP section. its pre-lockdown levels. The implied GDP government spending on health in the
deflator represents the broadest measure of second quarter while the volume of
Looking at the quarterly path of GDP in 2019, inflation in the domestic economy, reflecting government healthcare consumption fell.
there were upward revisions to growth in the changes in the price of all goods and
second and third quarters, whilst growth in services that comprise GDP. This includes In the third quarter, nominal spending on
the fourth quarter was revised slightly the price movements in private and health was largely unchanged, while
downwards. As a result of these revisions, government consumption, investment and volumes increased because of a strong
annual GDP growth in 2019 has been revised the relative price of exports and imports. It fell recovery in elective surgery and GP services,
up to 1.4%. by a revised 2.2% in the third quarter, which has impacted upon the growth rate of
primarily reflecting movements in the implied the implied deflator in the third quarter. In
An indicative monthly path associated with price change of government consumption, education, the large fall in the volume of
today’s figures can be found in the Links to which fell by 7.4% in Quarter 3 (Figure 2). education activity in the second quarter as a
related statistics section. These figures result of school closures throughout the
indicate that GDP grew by 6.5% in July 2020, The volume of government activity in the lockdown period, followed by the large
slowing to 2.1% in August and a further third quarter increased at a much greater increase in the third quarter as schools
easing to 1.1% in September. Monthly rate than nominal government expenditure. reopened, help explain the most recent
figures for October have also been This is partly because of the unwinding in quarterly movement in the implied deflator.
published, suggesting that GDP growth has some of the movements that occurred in the
continued to slow in recent months. second quarter, which saw a fall in the Statistical guidance recommends measuring
volume of government activity at the same many aspects of government output directly,
Nominal GDP increased by a revised 13.4% time as an increase in government by counting activities, rather than by
in Quarter 3 2020; its largest quarterly expenditure in nominal terms. For example, adjusting expenditure for price movements.
expansion on record and is now 3.4% below there was a large increase in nominal Compared with the same quarter a year ago,

30 WINTER 2021 – INDUSTRIAL TECHNOLOGY EXTRA