Quarterly National Accounts: Quarter 4 (Oct to Dec) 2015

UK GDP in volume terms was estimated to have increased by 0.6% between Quarter 3 (July to Sept) 2015 and Quarter 4 (Oct to Dec) 2015, revised up 0.1 percentage points from the second estimate of GDP published on 25 February 2016. This is the 12th consecutive quarter of positive growth since Quarter 1 (Jan to Mar) 2013.

Between 2014 and 2015, GDP in volume terms increased by 2.3%, revised up 0.1 percentage points from the previous estimate. Between Quarter 4 2014 and Quarter 4 2015, GDP in volume terms increased by 2.1%, revised up 0.2 percentage points from the previously published estimate.

GDP in current prices increased by 0.2% between Quarter 3 2015 and Quarter 4 2015, revised up 0.2 percentage points from the previously published estimate.

GDP per head in volume terms was estimated to have increased by 0.4% between Quarter 3 2015 and Quarter 4 2015. Between 2014 and 2015, GDP per head increased by 1.5%.

The households and non-profit institutions serving households saving ratio was estimated to be 3.8% in Quarter 4 2015 compared with 4.8% in Quarter 3 2015. In 2015, the saving ratio was estimated to be 4.2%. The quarterly and annual savings ratios are the lowest since records began in 1963.

Real household disposable income decreased by 0.6% between Quarter 3 2015 and Quarter 4 2015.

GDP growth is the main indicator of economic performance. There are 3 approaches used to measure GDP.

Gross value added (GVA) is the sum of goods and services produced within the economy less the value of goods and services used up in the production process (intermediate consumption). The output approach measures GVA at a detailed industry level before aggregating to produce an estimate for the whole economy. GDP (as measured by the output approach) can then be calculated by adding taxes and subtracting subsidies (both only available at whole economy level) to this estimate of total GVA (more information on creating the preliminary estimate of GDP is available on our methods and sources page).

The income approach measures income generated by production in the form of gross operating surplus (profits), compensation of employees (income from employment) and mixed income (self-employment income) for the whole economy.

The expenditure approach is the sum of all final expenditures within the economy, that is, all expenditure on goods and services that are not used up or transformed in the production process, that is, final consumption (not intermediate) for the whole economy.

The third estimate of GDP is based on revised output data, together with updated data from expenditure and income components. In the Quarterly National Accounts, the output GVA and GDP estimates are balanced with the equivalent income and expenditure approaches to produce headline estimates of GVA and GDP. Further information on all 3 approaches to measuring GDP can be found in the Short Guide to National Accounts.

All data in this bulletin are seasonally adjusted estimates and have had the effect of price changes removed (in other words, the data are deflated), with the exception of income data which are only available in current prices. For further information regarding non-seasonally adjusted data, please refer to the UK Economic Accounts. It can be downloaded directly from the UKEA dataset and on the UKEA main aggregates reference table.

Growth for GDP and its components is given between different periods. Latest year-on-previous-year gives the annual growth between one calendar year and the previous. Latest quarter-on-previous-quarter growth gives growth between one quarter and the quarter immediately before it. Latest quarter-on-corresponding-quarter-of-previous-year shows the growth between one quarter and the same quarter a year ago.

In line with National Accounts revisions policy, the earliest period open for revision in this release is Quarter 1 (Jan to Mar) 2015.

The Quarterly National Accounts are typically published around 90 days after the end of the quarter. At this stage the data content of this estimate from the output measure of GDP has risen to around 91% of the total required for the final output based estimate. There is also around 90% data content available to produce estimates of GDP from the expenditure approach and around 70% data content from the income approach.

The national accounts are drawn together using data from many different sources. This ensures that the national accounts are comprehensive and provide different perspectives on the economy, for example, sales by retailers and purchases by households. One source of information is from business surveys which use information provided directly from UK businesses. These data are subject to many layers of vigorous quality assurance by highly trained personnel, from clarity and confirmation of individual unit data direct from the business contact to scrutiny of data at the macro level. Other sources of data include other government departments and administrative data, including Value Added Tax data from HM Revenue and Customs (HMRC) which are subject to quality checks and challenge from ONS. By comparing and contrasting these different sources, the national accounts produce a single picture of the economy which is consistent, coherent and fully integrated.

The production and publication of each GDP release is managed by a highly skilled team with a strong emphasis on statistical, analytical and economic debate throughout the production process to publish the headline GDP estimate and components. Although a limited audience have access to GDP data ahead of publication, those involved in the process are selected to ensure each GDP balance achieves a rigorous statistical and economic challenge. A "balancing meeting" is held during each production round where presentations assess GDP and its components against a swathe of external indicators and a focus on GDP headline components. This is attended by senior managers within ONS who challenge the data to ensure consistency and plausibility of the GDP balance. We recognise the importance of transparency and have recently introduced an additional section in our background notes where the balancing adjustments applied - size and the components targeted - are now published.

Accompanying each quarterly and annual production cycle, external quality assurers with particular areas of expertise are invited to challenge and report on the statistical and economic coherence of the headline national accounts and component dataset. Current assessors include HM Treasury, Bank of England, National Institute of Economic and Social Research, HMRC and Tax Administration Research Centre. Drawing on their personal experience, expertise and subject knowledge, the external quality assurors work in a personal capacity to challenge the synergy of the dataset from a full range of views - from producers, data compilers and from users of the statistics - before final sign off.

Unlike many short-term indicators published by ONS, there is no simple way of measuring the accuracy of GDP. All estimates, by definition, are subject to statistical uncertainty and for many well-established statistics we measure and publish the sampling error and non-sampling error associated with the estimate, using this as an indicator of accuracy. Since sampling is typically done to determine the characteristics of a whole population, the difference between the sample and population values is considered a sampling error. Non-sampling errors are a result of deviations from the true value that are not a function of the sample chosen, including various systematic errors and any other errors that are not due to sampling. The estimate of GDP, however, is currently constructed from a wide variety of data sources, some of which are not based on random samples or do not have published sampling and non-sampling errors available and as such it is very difficult to measure both error aspects and their impact on GDP. While development work continues in this area, like all other G7 national statistical institutes, we don't publish a measure of the sampling error/non-sampling error associated with GDP.

One dimension of measuring accuracy is reliability, which is measured using evidence from analyses of revisions to assess the closeness of early estimates to subsequently estimated values. Many users try to minimise the impact of uncertainty through using the historical experience of revisions as a basis for estimating how confident they are in early releases and predicting how far and in what direction the early release might be revised. Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. The estimate is subject to revisions as more data become available, but between the preliminary and third estimates of GDP, revisions are typically small (around 0.1 to 0.2 percentage points), with the frequency of upward and downward revisions broadly equal. Many different approaches can be used to summarise revisions; the Validation and Quality Assurance section in the Quality and Methodology Information paper analyse the mean average revision and the mean absolute revision for GDP estimates over data publication iterations. In addition to this analysis, Section 14 of the Revisions to GDP and components in; Blue Books 2014 and 2015 article updates the metrics used to test revisions performance in order to answer the question "Is GDP biased?".

As seen in Figure 1, GDP in the UK grew steadily during the 2000s until a financial market shock affected UK and global economic growth in 2008 and 2009. Economic growth resumed towards the end of 2009, but generally at a slower rate than the period prior to 2008. From the peak in Quarter 1 (Jan to Mar) 2008 to the trough in Quarter 2 (Apr to June) 2009, GDP decreased by 6.1%.

This can be compared with previous economic downturns in the early 1980s and early 1990s, which saw lower levels of impact on GDP. In the early 1990s downturn, GDP decreased by 2.2% from the peak in Quarter 2 1990 to the trough in Quarter 3 1991. In the early 1980s downturn, GDP decreased by 5.6% from the peak in Quarter 2 1979 to the trough in Quarter 1 1981.

From Quarter 3 (July to Sept) 2009, growth continued to be erratic, with several quarters between 2010 and 2012 recording broadly flat or declining GDP. This 2-year period coincided with special events (for example severe winter weather in Quarter 4 (Oct to Dec) 2010 and the Diamond Jubilee in Quarter 2 2012) that are likely to have affected growth both adversely and positively. Since 2013, GDP has grown steadily, with the economy exceeding pre-downturn peak levels in Quarter 2 2013.

Quarter 4 2015 has shown continued strength with GDP growing by 0.6% compared with the previous quarter; by 2.1% between Quarter 4 2014 and Quarter 4 2015, and by 2.3% between 2014 and 2015. GDP has now increased for 12 consecutive quarters, breaking a pattern of slow and erratic growth from 2009.

Annex A contains output component growth rates back to Quarter 1 (Jan to Mar) 2015.

Three of the 4 main output industrial groupings within GDP showed increases in Quarter 4 (Oct to Dec) 2015 compared with Quarter 3 (July to Sept) 2015, with only production falling in this period. Within production, 2 of the 4 components increased and 2 components decreased, which resulted in overall negative growth in total production. All components within the service industries showed increases.

Production output decreased by 0.4% in Quarter 4 2015 compared with Quarter 3 2015, revised up 0.1 percentage point from the previously published estimate. Within the production sub-industries, output from mining and quarrying, including oil and gas extraction, decreased by 2.2%; electricity, gas, steam and air conditioning supply industries decreased by 2.2%, while manufacturing (the largest component of production) increased by 0.1% (Figure 2). Water supply and sewerage increased by 0.9%.

When comparing Quarter 4 2015 with Quarter 4 2014, production output increased by 0.8%, revised up 0.2 percentage points from the previously published estimate. Mining and quarrying, including oil and gas extraction, increased by 9.2%, while water supply and sewerage increased by 5.7%. Manufacturing fell by 1.0% between these periods while the electricity, gas, steam and air conditioning supply industries decreased by 1.7%.

Construction output increased by 0.3% in Quarter 4 2015, revised up 0.7 percentage points from the previously published estimate. Construction output increased by 1.0% between Quarter 4 2014 and Quarter 4 2015, revised up 0.6 percentage points from the previously published estimate.

The service industries increased by 0.8% in Quarter 4 2015 (Figure 3), revised up 0.1 percentage points from the previous estimate, marking the twelfth consecutive quarter of positive growth. This follows a 0.7% increase in Quarter 3 2015.

Output of the distribution, hotels and restaurants industries increased by 1.4% in Quarter 4 2015, following a 0.9% increase in Quarter 3 2015. The increase in the latest quarter was largely due to retail trade except of motor vehicles and motorcycles and wholesale and retail trade and repair of motor vehicles.

Output of the transport, storage and communication industries increased by 1.2% in Quarter 4 2015, following a 0.9% increase in Quarter 3 2015. The largest contributor to the increase was computer programming, consultancy and related activities.

Business services and finance industries’ output increased by 0.7% in Quarter 4 2015, following a 0.6% increase in Quarter 3 2015. The largest contributors to the increase were financial service activities, except insurance and pension funding and office administrative, office support and other business support activities.

Output of government and other services increased by 0.4% in Quarter 4 2015; this follows an increase of 0.5% in Quarter 3 2015. In the latest quarter the largest upward contribution came from activities of membership organisations.

Further detail on the service industries’ lower level components can be found in the Index of Services statistical bulletin published on 31 March 2016.

Gross value added (GVA) excluding oil and gas extraction increased by 0.6% in Quarter 4 2015 following a 0.4% increase in Quarter 3 2015.

Figure 4 shows the path of GDP and its headline industries (this excludes agriculture, and includes manufacturing which is a sub-component of production) relative to their level of output achieved in Quarter 1 2008.

In the decade prior to the downturn, the service industries grew steadily, while production output was broadly flat over the same period. Construction activity grew strongly in the early part of the decade, and although there was a temporary decline in the mid-2000s, this was reversed by the end of 2007.

Industries have shown differing trends following the recent economic downturn. The construction, manufacturing and production industries were more acutely affected by the deterioration in economic conditions, with output falling from peak to trough by 17.1%, 12.3% and 10.6% respectively. In contrast, output in the service industries only fell by 4.1% from its peak to trough.

Production activity began to grow again in 2010, and the manufacturing and the construction industries showed particular strength – neither industry sustained this growth. Production output fell in both 2011 and 2012, falling below levels seen at the height of the downturn in 2009. Construction output also fell sharply in 2012, with output falling close to its 2009 trough after further contraction in Quarter 1 2013. Construction output improved over much of 2014 and continued this trend in the first half of 2015, before a contraction of 1.6% in Quarter 3 2015. Quarter 4 2015 has shown growth in construction output of 0.3%, and has increased by 1.0% from Quarter 4 2014. Although there has been growth across all major components of GDP since the start of 2013, the service industries remain the largest and steadiest contributor to overall economic growth, and are the only headline industry in which output has exceeded pre-downturn levels.

Figure 5 shows the average compound quarterly growth rate experienced over the 5 years prior to the economic downturn in 2008 to 2009, the average growth rate experienced between Quarter 3 2009 and Quarter 2 (Apr to June) 2014 (5 years following the downturn), and the current quarterly growth rate observed in the most recent period (Quarter 4 2015). Compound average growth is the rate at which a series would have increased or decreased if it had grown or fallen at a steady rate over a number of periods. This allows the composition of growth in the recent economic recovery to be compared to the long run average.

The UK experienced slightly slower average compound GDP growth in the 5 years following the economic downturn compared with the 5 years prior: this is also true of the service industries. Figure 5 shows that in Quarter 4 2015, only the service industries outperformed the post-downturn average rate of growth, although both construction and manufacturing industries have seen expansion of 0.3% and 0.1% respectively. In Quarter 4 2015, Output of the distribution, hotels and catering industries showed particular strength with an increase of 1.4%, rising from 0.9% growth in the previous quarter.

It should be noted that the third column, which shows the current quarterly growth rate, is based on only 1 data point. Consequently users should use caution when making direct comparisons with the long run averages.

Annex B contains expenditure component growth rates back to Quarter 1 (Jan to Mar) 2015.

Total domestic expenditure (the sum of all expenditure by UK residents on goods and services that are not used up or transformed in a productive process) increased by 0.7% in Quarter 4 (Oct to Dec) 2015. Annually, between 2014 and 2015 total domestic expenditure increased by 2.6%.

Household final consumption expenditure (HHFCE) increased by 0.6% in Quarter 4 2015, and has increased for 10 consecutive quarters (Figure 6). The largest contribution to the increase in HHFCE in Quarter 4 2015 came from furniture and furnishings. When compared with the same quarter a year ago, HHFCE has been rising each quarter since Quarter 4 2011, and was 2.7% higher in Quarter 4 2015 than in the same period a year ago. Between 2014 and 2015, HHFCE increased by 2.8%.

Note that in the quarters of 2013 only, “National” HHFCE chained volume measure data is not the sum of its components.

Figure 7 shows the contribution of different categories of goods and services to quarter on same quarter of previous year growth in UK HHFCE. Growth has remained positive since Quarter 3 (July to Sept) 2011 and is shown to have been broad-based across both goods and services. While durable and semi durable goods were the predominant driver of growth in recent periods, the contribution of non durable goods has been positive in the last 4 quarters. In Quarter 4 2015, consumption of non-durables contributed 0.2 percentage points, the same contribution as the previous quarter. Non-durable goods include items which can only be consumed or used once; a good example of these are food products.

Government final consumption expenditure increased by 0.3% in Quarter 4 2015, following a 0.7% increase in Quarter 3 2015. Between Quarter 4 2014 and Quarter 4 2015, government final consumption expenditure increased by 2.2%. Between 2014 and 2015, government final consumption expenditure increased by 1.5%.

Non-profit institutions serving households’ (NPISH) final consumption expenditure increased by 0.7% in Quarter 4 2015, following a 1.5% fall in Quarter 3 2015. Between Quarter 4 2014 and Quarter 4 2015, NPISH final consumption expenditure increased by 3.6%. Annually, NPISH final consumption expenditure increased by 1.2% between 2014 and 2015.

In Quarter 4 2015, gross fixed capital formation (GFCF) was estimated to have decreased by 1.1% (Figure 8). Between Quarter 4 2014 and Quarter 4 2015, GFCF increased by 2.1%. GFCF increased by 4.1% between 2014 and 2015. More detail on GFCF, including a breakdown of the GFCF components, can be found in the Business investment statistical bulletin published on 31 March 2016.

Business investment was estimated to have fallen by 2.0% in Quarter 4 2015 and increased by 3.0% between Quarter 4 2014 and Quarter 4 2015. Annually, business investment increased by 5.2% between 2014 and 2015.

Including the alignment adjustment, the level of inventories increased by £3.4 billion in Quarter 4 2015, following an increase of £1.9 billion in Quarter 3 2015. Excluding the alignment adjustment, the level of inventories increased by £1.5 billion in Quarter 4 2015, following an increase of £2.3 billion in Quarter 3 2015. More information on the alignment adjustment can be found in the Balancing GDP section within the background notes of this release.

The trade balance deficit widened from £15.1 billion in Quarter 3 2015 to £16.4 billion in Quarter 4 2015 (Figure 9). The trade position reflects exports minus imports. Following a 0.5% decrease in Quarter 3 2015, exports increased by 0.1% in the latest quarter, while imports increased by 0.9% in Quarter 4 2015 following a 2.9% increase in Quarter 3 2015.

Exports of goods fell by 0.3% in Quarter 4 2015, due mainly to a decrease in chemicals which was partially offset by an increase in aircraft. Exports of services increased by 0.6% in Quarter 4 2015, due to an increase in telecommunications, computer and information services. In Quarter 4 2015, imports of goods increased by 0.6%, due to increases in oil and road vehicles which was partially offset by a fall in unspecified goods. Imports of services increased by 2.0% in Quarter 4 2015, due to an increase in other business services.

Between 2014 and 2015, exports increased by 5.1%, with increases in exports of services and exports of goods, while imports increased by 6.3%; reflecting an increase in both imports of goods and services.

Figure 10 shows a breakdown of the trade components and their contribution to GDP growth from Quarter 1 2008 to Quarter 4 2015. The series indicates that in the last 2 quarters the UK trade balance has made a negative contribution to GDP growth. When comparing Quarter 4 2014 with Quarter 4 2015, export of goods increased by 2.2% and contributed 0.4 percentage points to GDP growth. This was offset by the 3.1% growth in the import of goods, which contributed -0.8 percentage points to GDP growth.

Figure 11 shows the quarterly contribution of the expenditure components to the growth of GDP in chained volume measures. For Quarter 4 2015, the largest positive contribution to GDP came from household final consumption expenditure, which contributed 0.4 percentage points. General government final consumption expenditure contributed 0.1 percentage points. The negative contributions to GDP came from net trade, which contributed a negative 0.3 percentage points and gross fixed capital formation, which contributed a negative 0.2 percentage points.

Annex D contains implied deflator component growth rates back to Quarter 1 (Jan to Mar) 2015.

The GDP implied deflator at market prices for Quarter 4 (Oct to Dec) 2015 is 0.1% above the same quarter of 2014 (Figure 12). The GDP implied deflator is calculated by dividing current price (nominal) GDP by chained volume (real) GDP and multiplying by 100 to convert to an index. It is not used in the calculation of GDP; the deflators for expenditure components, which are the basis for the implied GDP deflator, are used to calculate nominal GDP, not real GDP.

Annex C contains income component growth rates back to Quarter 1 (Jan to Mar) 2015.

GDP at current market prices increased by 0.2% in Quarter 4 (Oct to Dec) 2015, following a 0.6% increase in Quarter 3 (July to Sept) 2015. GDP at current market prices increased by 2.2% when compared with Quarter 4 2014. In 2015, GDP at current market prices increased by 2.6%.

Compensation of employees – which includes both wages and salaries, and employers’ social contributions, increased by 0.8% in Quarter 4 2015, following an increase of 0.8% in Quarter 3 2015 (Figure 13). Between Quarter 4 2014 and Quarter 4 2015, compensation of employees increased by 3.3%. In 2015, compensation of employees increased by 3.6%.

The gross operating surplus of corporations (effectively the profits of companies operating within the UK), including the alignment adjustment, decreased by 3.0% in Quarter 4 2015 compared with the previous quarter; this follows an increase of 0.7% in Quarter 3 2015 (Figure 14). Between 2014 and 2015, the gross operating surplus of corporations increased by 0.2%. More information on the alignment adjustment can be found in the Balancing GDP section within the background notes of this release.

Taxes less subsidies on products and production increased by 1.9% in Quarter 4 2015, following an increase of 0.3% in Quarter 3 2015. Between 2014 and 2015, taxes less subsidies on products and production increased by 2.2%.

Figure 15 shows the contribution made by income components to current price GDP. In Quarter 4 2015, there were positive contributions to GDP from compensation of employees which contributed 0.4 percentage points, other income which contributed 0.4 percentage points and taxes on products and production less subsidies which contributed 0.2 percentage points. The only negative contribution to GDP came from gross operating surplus (GOS) of corporations which contributed a negative 0.7 percentage points.

In Quarter 4 (Oct to Dec) 2015, GDP per head increased by 0.4%, compared with Quarter 3 (July to Sept) 2015, revised up 0.1 percentage points from the previously published estimate. GDP per head is now 0.9% above its pre-downturn peak in Quarter 1 (Jan to Mar) 2008, having surpassed it in Quarter 2 (Apr to June) 2015. Headline GDP exceeded the level of its pre-downturn peak in Quarter 2 2013 and is now 6.8% above its pre-downturn peak (Figure 16).

Between Quarter 4 2014 and Quarter 4 2015, GDP per head increased by 1.3%, revised up 0.1 percentage points from the previously published estimate. Between 2014 and 2015, GDP per head increased by 1.5% compared with a growth of 2.1% between 2013 and 2014, both of these are unrevised from the previously published estimate.

GDP per head is calculated by dividing GDP in chained volume measures by the latest population estimates and projections. The population estimates used in this release are those published on 25 June 2015 and the population projections used are those published on 29 October 2015.

Summary

Annually for 2015, the central government, local government, financial corporations, and households and non-profit institutions serving households sectors were net borrowers. The public corporations, private non-financial corporations and rest of the world sectors were net lenders.

In Quarter 4 (Oct to Dec) 2015, the central government, local government, public corporations, financial corporations, and households and non-profit institutions serving households sectors were net borrowers. The private non-financial corporations and rest of the world sectors were net lenders (Figure 17).

Compared with the previous quarter, there has been a switch from net lending to net borrowing in the financial corporations’ sector. All other sectors remain unchanged.

Compared with the previous year all sectors remain unchanged.

Table I has further detail.

Saving ratio:

Annually for 2015 the saving ratio was 4.2%, compared with 5.4% in 2014.

The saving ratio for Quarter 4 (Oct to Dec) 2015 was 3.8%, compared with 4.8% in the previous quarter (Figure 18).

This fall in the latest quarter reflects a rise in final consumption expenditure and a fall in miscellaneous current transfers, partially offset by increased gross operating surplus and mixed income. Figure 19 shows the main components contributing to the quarterly saving ratio movement.

The decrease in the saving ratio in 2015 reflects rises in consumption expenditure, taxes on income and wealth and a fall in net property income, which are partially offset by rises in wages and salaries, gross operating surplus and mixed income.

What is the saving ratio?

The saving ratio estimates the amount of money households and NPISH have available to save (known as gross saving) as a percentage of their total disposable income (known as total available resources). Both can be found in table J3 of this release.

Gross saving estimates the difference between households’ and NPISH total available resources (mainly wages received, revenue of the self-employed, social benefits and net income such as interest on savings and dividends from shares, but excluding taxes on income and wealth) and their current consumption (expenditure on goods and services).

All of the components that make up gross saving and total available resources, and in fact all sector accounts data apart from real households disposable income (RHDI), are estimated in current prices (CP). These are sometimes known as nominal prices, meaning that they include the effects of price changes.

The saving ratio is published in both non-seasonally adjusted (NSA) and seasonally adjusted (SA) formats with the latter removing seasonal effects to allow comparisons over time. However, the saving ratio can be volatile and is sensitive to even relatively small movements to its components, particularly on a quarterly basis. This is because saving is a small difference between 2 numbers. It is therefore often revised at successive publications when new or updated data are included.

For the year 2015, real household and NPISH disposable income increased by 3.3% following an increase of 0.6% in 2014. This reflects a rise of 3.5% in nominal gross disposable income, partially offset by a 0.2% rise in the household and NPISH final consumption deflator. The increase in nominal gross disposable income was predominantly due to a rise in wages and salaries, net social benefits other than transfers in kind together with gross operating surplus and mixed income. This was partially offset by a rise in taxes on income and wealth and a fall in net property income.

The level of real household and NPISH disposable income decreased by 0.6% in Quarter 4 (Oct to Dec) 2015, following an increase of 1.6% in the previous quarter (Figure 20).

The fall in the latest quarter reflects a 0.6% rise in the nominal gross disposable income with a 1.2% increase in the household and NPISH final consumption deflator. The rise in nominal gross disposable income was due to a rise in gross operating surplus and mixed income partially offset by a fall in miscellaneous current transfers.

Figure 21 shows the main components contributing to the quarterly movement of households and NPISH gross disposable income.

What is real household and NPISH disposable income?

There are 2 measures of households and NPISH income, in real terms or in current prices (or nominal as it is often called), and both of these time series can be found in table J2 of this release.

Gross households and NPISH disposable income (GDI) is the estimate of the total amount of money from income that households and NPISH have available from wages received, revenue of the self-employed, social benefits and net income (such as interest on savings and dividends from shares) less taxes on income and wealth. All the components that make up GDI are estimated in current prices.

However, by adjusting GDI to remove the effects of inflation, we are able to estimate another useful measure of disposable income called real disposable income. This is a measure of real purchasing power of households and NPISH incomes, in terms of the physical quantity of goods and services they would be able to purchase. We use the households and NPISH expenditure deflator (which can be found in table J2 of this release) to remove the effects of price inflation.

For the year 2015, net lending was £32.3 billion following net lending of £28.6 billion in 2014. This increase was due to a rise in gross operating surplus and a fall in gross capital formation, partially offset by a fall in net property income and a rise in taxes on income and wealth.

Net lending of private non-financial corporations’ was £5.1 billion in Quarter 4 (Oct to Dec) 2015, following net lending of £10.5 billion in the previous quarter. This decrease in net lending in the latest quarter was due to a fall in net property income and gross operating surplus, partially offset by a fall in gross capital formation.

A more detailed commentary on the sector accounts is available.

The estimates quoted in this international comparison section are the latest available estimates published by the respective bodies (referenced) at the time of preparation of this statistical bulletin and may subsequently have been revised.

All areas included within our international comparison, saw positive growth, except Japan, when comparing Quarter 4 (Oct to Dec) 2015 with Quarter 3 (July to Sept) 2015 (Figure 22). The European Union (EU28) grew by 0.4% in Quarter 4 2015, marking 11 consecutive quarters of positive growth (Table 2). In the same period, the eurozone (EA19) expanded by 0.3%. When comparing Quarter 4 2014 with Quarter 4 2015, EA19 grew by 1.6% whilst the EU28 expanded by 1.8% (Figure 23).

Germany and France both saw their GDP increase by 0.3% between Quarter 3 2015 and Quarter 4 2015, following a similar increase in the previous quarter.

In Quarter 4 2015, the USA’s economy increased by 0.3%. Between Quarter 4 2014 and Quarter 4 2015, GDP for the USA increased by 2.0%. GDP for Japan decreased by 0.3% in Quarter 4 2015, following an increase of 0.3% in the previous quarter. However, between Quarter 4 2014 and Quarter 4 2015, Japan’s economy grew by 0.8%.

GDP for the Group of Seven (G7) countries increased by 0.2% in Quarter 4 2015, following a 0.4% increase in the previous quarter. When comparing Quarter 4 2014 with Quarter 4 2015, G7 GDP increased by 1.6% and is now 6.3% above its pre-recession peak in Quarter 1 (Jan to Mar) 2008.

More detailed information on these estimates can be found on the Eurostat website. Information on the estimates for the USA can be found on the Bureau of Economic Analysis website; information on the estimates for Japan can be found on the Japanese Cabinet Office website while information for the G7 countries can be found on the Organisation for Economic Co-operation and Development’s website.

Figure 24 shows GDP for the UK, EU, the USA and Japan, all indexed to Quarter 1 2008 (the pre-downturn peak in the UK) to allow comparison of each since that period.

GDP and components, previously published on 25 February 2016

Figure 25 shows quarterly revisions between latest and previously published estimates of GDP. Quarter 1 (Jan to Mar) 2015 is the earliest period open for revision in this release.

Detailed revisions for the 3 GDP approaches

• output revisions are shown in Annex E

• expenditure revisions are shown in Annex F

• income revisions are shown in Annex G

Sector accounts revisions, previously published 23 December 2015

• sector accounts revisions are shown in Annex H