National accounts at a glance

All UK figures referred to in this section are consistent with Blue Book 2024, which contains data and methodological improvements affecting estimates that are produced as part of the national accounts. These latest estimates achieve a higher level of accuracy. However, these more recent statistics should still be considered provisional and remain subject to revision in future annual national accounts publications.

Revisions can still occur when there are data changes or methodological improvements that are required to ensure data comparability over time. The nature and impact of any such revisions are communicated in line with the National Accounts Revisions Policy.

Real gross domestic product (GDP) is estimated to have increased by 0.3% in 2023, following a recovery from the impacts of the coronavirus (COVID-19) pandemic over the two previous years (Figure 1). The economy temporarily contracted in the second half of 2023, leaving GDP in Quarter 4 (Oct to Dec) 0.3% lower, compared with its level a year ago. This slowdown was primarily caused by a combination of higher living costs and tighter financial conditions. There was an increase in activity in the first half of 2024.

GDP is a measure of the total output produced in a particular country and GDP per head is one indicator of a country's living standards. GDP per head fell by 0.8% in 2023, as the population increased at a faster rate than the volume of output produced. As discussed in our Population estimates for the UK, England, Wales, Scotland and Northern Ireland: mid-2023 bulletin, net international migration was the main contributor to the large increase in the UK population over the last two years. Natural change (births minus deaths) decreased to its slowest pace since the 1970s. The impact of net migration on trends in UK real GDP per head will also depend on its impact on hourly productivity, average hours worked, and the employment-to-population ratio.

Gross domestic product (GDP) is a production concept, but net domestic product (NDP) is more appropriate from a welfare and sustainability perspective. It reflects the level of resources that are available for consumption or investment, and is a rough proxy of the level of consumption that can be maintained while leaving capital assets intact. This is because NDP considers the depreciation of capital assets – that is, the capital that is consumed as part of the production process for GDP.

Real UK NDP is estimated to have increased by 0.8% in 2023, while real NDP per head is estimated to have fallen by 0.3% (see Figure 3), compared with a 0.8% decrease in real GDP per head. Real NDP has been increasing more quickly than real GDP over the last three years, after having decreased by more than real GDP in 2020. This is because consumption of fixed capital did not fall during the coronavirus (COVID-19) pandemic period, unlike other types of expenditure. Non-financial corporations account for most of this consumption of fixed capital, followed by households, and the general government.

Real gross domestic income (GDI) considers movements in the terms of trade (the ratio of an economy's export prices to import prices). This reflects the purchasing power of a nation's output over goods and services in the global market. An improvement in the terms of trade reflects that the price received for exports has increased, relative to the price paid for imports.

Real income is a measure that is linked to the sustainable level of consumption. It is also a measure that is "net" of depreciation, and includes the balances in net foreign income and transfers. It is deflated using the price of consumption expenditure, so that the volume of net output is valued in terms of consumption units. This a similar concept to real net national disposable income (NNDI) which uses a broader deflator of economic output.

Figure 4 shows that these economic welfare measures declined in 2023 when compared with 2022 on a per head basis. Real GDI per head decreased slightly in 2023 by 0.1%, while the decline in real income per head was more pronounced at 1.7%, leaving both measures below their pre-coronavirus (COVID-19) pandemic levels from 2019. In addition to the increase in prices and in the UK total population, this decline in real income per head was also affected by a worsening in the primary income balance, which moved into a deficit position in 2023, as UK payments to foreign investors exceeded receipts from UK residents' investments abroad.

Economic activity in the UK slowed in 2023 across industries. There was a fall in output produced in 8 out of the 20 industry groups, compared with a year ago. Out of the 12 industry groups that grew in 2023, 10 expanded at a slower pace compared with 2022.

Several consumer-facing industries reduced their economic activity in 2023, as the higher cost of living and slower employment growth reduced households' inclination to spend. This includes the "accommodation and food services" industry, where output fell by 4.6% in 2023. "Wholesale and retail trade activities (excluding motor vehicles)" also contracted in 2023. This seems to have affected some downstream industries too, such as "transport and storage". Output in the "distribution and hospitality" industry remained below its level from 2019.

Some business services reduced their output in 2023. For example, in the "information and communication" service, output fell by 2.1%. Economic activity in this industry group has increased because of coronavirus (COVID-19) pandemic restrictions, and output remains 16.2% above its 2019 level, despite last year's fall. "Professional, scientific and technical services" are another industry group where growth has slowed in 2023, while output was 12.9% above its pandemic level.

Economic activity increased by 6.8% and 3.0% in the "administrative and support services" and "education" industries, respectively, in 2023. The automotive sector also continued to recover, with output increasing by 13.5% for "vehicle trade and repairs" and by 20.7% for "vehicle production", for the third year in a row in 2023. Output in the construction sector increased by 2.5% in 2023.

Real household final consumption expenditure is estimated to have increased by 0.5% in 2023, (see Figure 6). The higher cost of living, tight financial conditions, and some cooling in the labour market led to a reduction in household spending during the year, with real consumption having declined by 0.7% in Quarter 4 (Oct to Dec) 2023, when compared with the same period a year ago. Although real household disposable income (RHDI) increased in 2023, household consumption did not keep up with this pace, pushing up the saving ratio to 7.4% in 2023, from 6.0% in 2022. Like consumer-facing services, spending on transport, hospitality, and some retail goods was the main area of household expenditure that remained below its pre-pandemic level.

Gross fixed capital formation is estimated to have been largely unchanged in 2023 (negative 0.1%), following increases of 7.6% in 2021 and 5.1% in 2022. On a cumulative basis, fixed investment was above its 2019 levels by 2.1%. This was mostly the result of higher government investment, while business investment remained slightly below its pre-pandemic levels. By type of asset, the increase in fixed investment was led by "machinery and equipment", when compared with other types of investment, such as "buildings" and "intellectual property".

Trade volumes declined in 2023, as exports fell by 2.2%, while imports decreased by 3.4%. This more rapid decrease in imports relative to exports reduced the deficit in the UK's net trade balance, which improved its contribution to gross domestic product (GDP) growth. The UK's terms of trade improved by 2.1% in 2023. This was mainly caused by some moderation in energy prices from their peak levels in 2022.

The coronavirus (COVID-19) pandemic brought about large changes in income and expenditure, particularly for households and the general government. The concept of forced savings and government subsidies were important factors during pandemic restrictions in 2020 and 2021, and during the energy price shock following the start of the war in Ukraine.

General government net borrowing declined from its pandemic peak levels, but deficits remained wider compared with their pre-pandemic position, at 4.6% in 2022 and 5.7% in 2023. These government deficits were financed in both years by government net borrowing from UK financial corporations, and by current-account deficits with the rest of the world. In 2023, the household sector also returned to a net lending position (see Figure 7).

Households increased their net lending to 1.4% of gross domestic product (GDP) in 2023 from a net borrowing position in 2022. Similarly, UK financial corporations increased their net lending to 2.5% of GDP in 2023, from 2.3% in 2022. These higher household and financial sector surpluses were partly offset by private non-financial corporations (PNFCs) moving to a net borrowing position in 2023, from a net lending position in 2022. Net borrowing from the rest of the world was unchanged in 2023, at 2.2% of GDP.

Real gross domestic product (GDP) growth slowed in most G10 economies in 2023 (Figure 8). More information about the G10 countries can be found in our glossary. The US and Japan were the main exceptions and had the most rapid growth among the G10 last year. Growth rates were the lowest in Germany and Sweden, where economic output fell slightly in 2023.

On a cumulative basis, the US economy grew the most among the G10, compared with its pre-coronavirus (COVID-19) pandemic level from 2019 (by 8.5% in 2023). This is partly because, in recent years, the saving ratio did not increase in the US, as much as it did in the UK, as US households more frequently spent any increases in their real disposable income. This in turn supported GDP growth. The German and Japanese economies grew the least over this period, (by 0.5% and 0.9%, respectively, based on Organisation for Economic Co-operation and Development (OECD) data. Output may have been limited by the effect of energy shocks, among other factors, as these economies have high shares of manufacturing output, and are also net energy importers.

Real GDP per head declined in six of the G10 countries in 2023, including the UK, as high inflation was relatively widespread across advanced economies (see Figure 9). Out of the countries where GDP per head increased in 2023, the growth rate slowed in three more economies. The United States and Japan were the main exceptions, where GDP per head accelerated in 2023 and increased by 2.4% and 2.2%, respectively.

The implied price of GDP represents the broadest measure of inflation in the domestic economy, reflecting changes in the price of all goods and services that comprise GDP. More information is available in our Role of labour costs and profits in UK inflation: 2010 to 2023 article. This implied GDP deflator in the UK increased by 18.8% in 2023 compared with 2019 (annual averages). This is within the range of other G10 economies, where the implied price of GDP increased between 14% and 25% over the same period. Countries with the highest increases in these implied prices of GDP more often experienced a reduction in living standards and a fall in real GDP per head in 2023 (see Figure 10).