24 April 2014

International Compendium: Economy Theme

Coverage: International Date: 24 April 2014 Geographical Area: UK Theme: Economy

Introduction
The International Compendium consists of three themes; Economy, Labour Market and Population. The purpose of the compendium is to bring together a selection of comparable statistics for the UK and other European and non European countries along with a series of charts and commentary. Comparisons are made at a number of levels throughout the compendium with a focus on European comparisons, as well as wider international comparison, for example G7 countries or individual countries from Europe and elsewhere. A data catalogue is also included for each theme that provides links to the sources used in the commentary as well as links to additional sources of information. The compendium draws on a number of sources of information which include existing ONS releases and data from the Organisation for Economic Co-operation and Development (OECD) and Eurostat (the statistical office of the European Union). The focus is therefore on existing published information and the compendium covers a broad range of information across the three themes. ONS intends to build on this initial version of the compendium to include further statistics and analysis. We would, therefore, welcome comments on the format and content of the compendium so that it can develop further over time. In the economy theme we bring together information on Gross Domestic Product and other economic indicators, productivity, trade, inflation, and expenditure on research and development.

Gross Domestic Product and other economic indicators

International Comparison In Q4 2013, Gross Domestic Product (GDP) grew by an unrevised 0.3% quarter on quarter in the Euro area, while the European Union (EU 28) (see Table 1.1) also saw accelerated quarterly growth for Q4 2013, increasing by 0.4% quarter on quarter (see Figure 1.1) and by 1.1% on the same quarter of the previous year (see Figure 1.2). The European Union grew by 1.0% in Q4 2013 compared to Q4 2012. The United States of America saw quarterly growth of 0.6% in Q4 2013,

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revised down 0.2 percentage points from the 0.8% in the second estimate, while Japan was also revised down by 0.1 percentage points, increasing by 0.2% in Q4 2013. Both the US and Japan grew by 2.5% when compared to the same quarter of the previous year. Table 1.1: International comparion of GDP growth rates
Quarter on previous quarter % growth rates

EU28 Eurozone

France

Germany

Japan United Kingdom

United States of America -0.3 0.8 0.3 1.2 0.9 0.3 0.7 0.0 0.3 0.6 1.0 0.6

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

0.7 0.1 0.2 -0.2 0.0 -0.2 0.0 -0.4 -0.1 0.4 0.3 0.4

0.8 0.1 0.1 -0.2 -0.1 -0.3 -0.2 -0.5 -0.2 0.3 0.1 0.3

1.1 -0.1 0.3 0.1 0.0 -0.3 0.2 -0.2 -0.1 0.6 0.0 0.3

1.5 0.1 0.4 0.1 0.7 -0.1 0.2 -0.5 0.0 0.7 0.3 0.4

-1.9 -0.6 2.6 0.2 0.9 -0.4 -0.8 0.0 1.1 1.0 0.2 0.2

0.5 0.1 0.6 -0.1 0.0 -0.4 0.8 -0.2 0.4 0.8 0.8 0.7

Table source: Office for National Statistics

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Figure 1.1: International GDP growth rates, quarter on quarter

Source: Office for National Statistics Download chart XLS format (22 Kb)

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Figure 1.2: International GDP growth rates, quarter on same quarter a year ago

Source: Office for National Statistics Download chart XLS format (21.5 Kb)

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Figure 1.3: International GDP growth rates, quarter on quarter (indexed to Q1 2008=100)

Source: Office for National Statistics Download chart XLS format (20 Kb) More information on these estimates can be found in the ONS Quarterly National Accounts release Recent analysis has been published by ONS that draws on OECD data to undertake a comparison of GDP growth in the G7 countries and the rates for the OECD, Eurozone area and the EU, shown in Table 1.2.

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Table 1.2: Average quarterly GDP growth and peak to trough & peak to latest-quarter
Quarter on previous quarter % growth rates

2000 - 2007 Canada France Germany Italy Japan Uk US G7 Euro Area European Union OECD
1

2008 - 2009 -0.2 -0.4 -0.5 -0.8 -0.7 -0.9 -0.4 -0.5 -0.6 -0.6 -0.4

2010 - Q3 2013 0.6 0.2 0.5 -0.2 0.4 0.3 0.6 0.4 0.1 0.2 0.5

Peak-totrough -4.2 -4.4 -6.8 -7.2 -9.2 -7.2 -4.1 -5.2 -5.7 -5.8 -4.9

Peak-to-now 6.2 -0.3 2.6 -9.1 -0.5 -2.0 5.8 2.8 -2.9 -2.2 3.6

0.7 0.5 0.4 0.3 0.4 0.8 0.6 0.5 0.5 0.6 0.6

Table notes: 1. There are currently 34 members of the OECD: Australia, Austria Belgium, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. 2. Source: Organisation for Economic Co-operation and Development (OECD)

Download table XLS format (27 Kb) The comparison of the UK with the European Union (EU) and euro area averages shows that growth in the euro area has been slightly lower than that of the wider European Union since 2010. However, both have been lower than that of the UK. The depth of the UKs downturn, combined with the weakness of growth since the recovery, has resulted in the UK lagging behind many other economies in returning to its pre-downturn peak. GDP for the UK in Q3 2013 was 2.0% below its pre-downturn peak in Q1 2008. (Latest figures show that this shortfall was reduced to 1.3% following publication of figures for GDP in Q4 2013, but figures for this period are not yet available for most other countries.) In comparison, for the G7 as whole, GDP in Q3 2013 was 2.8% above its pre-downturn peak, with the US and Canada now around 6% higher. GDP in both the EU and the euro area lies below the respective pre-downturn peaks, by 2.2% and 2.9% respectively, reflecting weakness in Italy and some of the smaller economies.

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OECD Countries Comparison ONS has previously undertaken an analysis of data from OECD countries on a range of economic indicators for 2011. In this section we update some aspects of this analysis with data from OECD for 2012 and 2013. GDP is the most well-known macroeconomic indicator, and can be considered as either the total of income, expenditure or production within an economy. It can be defined as the value of all the goods and services produced within the economic territory of a country, in other words its entire output, during a given period (it can also be defined in a similar way as the total income or expenditure of an economy). Figure 1.4 shows how OECD countries compare against each other when looking at real GDP per head. This is on a per head basis and adjusted to reflect relative purchasing power. In 2012, the UK ranked 16th place with a GDP per head less than half that of Luxembourg in first place but more than twice that of Mexico at the other end of the scale. It should be noted, however, that the high levels of GDP in Luxembourg are driven by the small population and high levels of workers travelling into the country on a daily or weekly basis. Figure 1.4: Real GDP Per Head for 2012
OECD Countries, UK=100

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Download chart XLS format (20 Kb) Although GDP has traditionally been considered a measure of living standards, it was not designed for this purpose. GDP measures production and not material well-being. Living standards are more closely aligned with Net National Income (NNI) which is an alternative measure of the total income available to residents of that country. NNI differs from GDP in two ways. Firstly, it includes only the income from UK production (in other words, the share of GDP) that can be claimed by individuals and organisations resident in the UK. It then adds to this the income that these residents can claim from the GDP of other countries. This production is still part of the UKs income even though it does not take place within its national boundaries. Additionally NNI is adjusted for capital depreciation - that is to say the day-to-day wear and tear on vehicles, machinery, buildings and other fixed capital used in the productive process. This takes account of income that is used to simply replace or repair existing vehicles, machinery, buildings and other fixed capital. Figure 1.5 shows how the UK compares to other OECD countries when using real NNI per head. In 2012 the UK ranked 10th place higher than the ranking under GDP per head. Using NNI per head has resulted in the UK overtaking Belgium, Denmark and France on this measure. However, the UK remains behind Netherlands, Sweden, Germany and Austria.

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Figure 1.5: Real NNI Per Head for 2012

OECD Countries, UK=100

Notes: 1. Source: OCED

Download chart XLS format (28 Kb) While NNI or GDP per head tell us about what is happening in the economy at the current time, levels of public debt give us an indication of how the current situation may affect the future. Debt effectively transfers the burden of paying for current consumption from the present to the future. Public Sector Debt is government debt and can be transferred from one generation of tax payers to the next. However, it is worth highlighting that future economic progress can increase when debt is spent on investment in assets and capital, which generate income over their lifetime. The UK has moved up the rankings when considering Gross Public Sector Debt (Figure 1.6) from the 15th most indebted OECD country in 2000 to the 7th most indebted OECD country in 2013. Notable countries at the top of the ranking include Greece, Italy, Portugal and Ireland all of whom have experienced problems with sustainability of debt in recent years.

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Figure 1.6: Gross Public Debt as a Percentage of GDP in 2013

Selcted OECD Countries

Notes: 1. Source: OCED

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Productivity
ONS regularly publishes international comparisons of productivity and this section highlights the latest data from this release. Current price productivity estimates allow for comparison of how much economic output, measured in common currency terms, is produced by each hour worked (figure 2.1) and each worker (figure 2.2) across countries in a particular year, relative to the UK=100. On this basis, UK productivity in 2012 was: Above that of Japan by 11 percentage points Lower than that of Canada and Italy by 5 and 11 percentage points respectively Lower than that of the remaining G7 countries by over 30 percentage points

Figure 2.1: GDP per hour worked, G7 countries

Source: Office for National Statistics

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Download chart XLS format (19 Kb) Comparing 2012 with 2011, the UK productivity shortfalls relative to Canada, France, Germany, Italy and the US all widened, and the UK productivity lead over Japan narrowed by 2 percentage points. The difference in productivity on this measure between the UK and the rest of the G7 widened to the greatest differential since 1992. GDP per worker Final estimates for 2012 show that UK output per worker was: Above that of Japan by 7 percentage points Below that of Canada and Germany by 8 and 11 percentage points respectively Below that of Italy and France by 18 percentage points Below that of the US by 46 percentage points

Figure 2.2: GDP per worker, G7 countries

Source: Office for National Statistics

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Download chart XLS format (18 Kb) Comparing 2012 with 2011, the shortfall between output per worker in the UK and the rest of the G7 increased by 1 percentage point, while the UKs lead over Japan on this measure narrowed to the smallest margin since 1997. Figure 2.3: Average annual hours per worker, G7 countries

Source: Office for National Statistics Download chart XLS format (19.5 Kb) As illustrated in Figure 2.3, there are significant differences in average hours worked across the G7, reflecting cultural and compositional differences between economies. These differences account for differences in the patterns of productivity in Figures 2.1 and 2.2. The difference in average hours worked in 2012 between the US (where average hours are highest across the G7) and Germany (lowest) is equivalent to around 8 hours per week for the average worker.

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Constant Price Productivity Constant price productivity estimates are indexed to 2007=100 and show the evolution of labour productivity for each country and group of countries over time. Figure 2.4: Constant price GDP per hour worked, selected G7 countries

Source: Office for National Statistics Download chart XLS format (19.5 Kb) Figure 2.4 shows GDP per hour worked for the UK and an aggregated series for the rest of the G7, together with simple projections based on average productivity growth over 1997-2007, that is, before the global economic downturn. On this basis, the combination of strong UK productivity growth up to 2007 and weak productivity performance since 2007 implies a productivity gap of 16 percentage points in 2012. Average annual productivity growth between 1997 and 2007 for the rest of the G7 was lower than in the UK (around 1.9%, compared with 2.5% for the UK), and productivity performance since

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2007 has on average been somewhat stronger, implying a smaller productivity gap of around 5 percentage points on the same basis. Figure 2.5 illustrates the difference in productivity trajectories over recent years between the main European economies on the one hand, and North America and Japan on the other hand. Output per hour fell sharply in most countries over the 2008-09 downturn, but then rebounded sharply in Japan, Canada and especially the US, whereas the recovery in productivity has been much more muted for the main European economies. Figure 2.5: Constant price GDP per hour worked, selected G7 countries

Source: Office for National Statistics Download chart XLS format (19 Kb) Converting the time series in Figure 2.5 into productivity gaps (calculated as in Figure 2.4) for 2012 would yield gaps of 3 to 5 percentage points for the US, Japan, Italy and Canada, and 8 to 9 percentage points for France and Germany, all considerably below the UK productivity gap.

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Trade in Goods
Figure 3.1 and 3.2 show trade in goods trends with selected EU trading partners. Figure 3.1 shows the balance between imports and exports and shows that the UK imports more goods than it exports from all countries in the chart except the Irish Republic. The main source of imported goods is Germany where the balance between imports and exports was -26 billion in 2013. Figure 3.2 shows the percentage change from the period Nov 2013-Jan 2014 compared to the same three months a year previously. This shows a fall in exports to Germany, Belgium and Luxembourg and Sweden but an increase in exports to Spain, Italy and Ireland. Imports have increased from Germany, Ireland, the Netherlands, France, and Belgium and Luxembourg. Figure 3.1: Trade in goods with selected EU trading partners (2011-2013)
Balance of Imports and Exports in millions (seasonally adjusted)

Source: Office for National Statistics Download chart XLS format (18.5 Kb)

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Figure 3.2: Trade in goods with selected EU trading partners

Percentage change in imports and exports, November to January 2014 compared to the same 3 months last year

Source: Office for National Statistics Download chart XLS format (18.5 Kb) Figures 3.3 and 3.4 show the same data as 3.1 and 3.2 but this time for selected non-EU trading partners. Figure 3.3 shows that the UK is a net exporter to the USA and South Korea but imports more than it exports from Switzerland, Norway, Japan, Hong Kong, China and Canada.

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Figure 3.3: Trade in goods with selected non-EU trading partners (2011-2013)
Balance of Imports and Exports in millions (seasonally adjusted)

Download chart XLS format (18.5 Kb) Figure 3.4: Trade in goods with selected non-EU trading partners
Percentage change in imports and exports, November to January 2014 compared to the same 3 months last year:

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Source: Office for National Statistics Download chart XLS format (18.5 Kb) In Figure 3.5 and 3.6 the top 10 export markets and import sources for goods are shown for 2013 in millions and as a per cent of the total in each case. The top export markets were the United States, Germany and the Netherlands and the top import sources were Germany, the Netherlands and China in 2013. Figure 3.5: UK's top 10 export markets in 2013

Source: Office for National Statistics Download chart XLS format (33.5 Kb)

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Figure 3.6: UK's top 10 import sources in 2013

Source: Office for National Statistics Download chart XLS format (33.5 Kb)

Inflation
The Harmonised Index of Consumer Prices (HICP) is an indicator of inflation and price stability for the European Central Bank (ECB). It is a consumer price index which is compiled according to a methodology that has been harmonised across EU countries. In the UK this is published as the Consumer Price Index (CPI). Consumer Price Inflation estimates are published monthly by the ONS (insert link). This includes publication of the HICP tables of data for EU countries. In figure 4.1 change in HICP over the period 1997-2013 is shown as a rate (2005=100) for selected EU countries including the UK. This shows the relatively steep increase in inflation in the UK relative to other EU countries up to 2013. Inflation in all countries has fallen since 2011 but at a slightly slower rate in the UK.

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Figure 4.1: HICP - International comparisons: EU countries: 1997 to 2014

2005=100

Source: Office for National Statistics Download chart XLS format (22.5 Kb) Figure 4.2 shows the downward trend in change in HICP over the period January 2011 to January 2014 for selected countries. This monthly percentage change from the equivalent month 12 months previously, shows that inflation has been falling at a slower rate in the UK in comparison to the situation in the EU as a whole and in selected countries.

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Figure 4.2: Monthly percentage change in HICP Jan 2011 Jan 14 (selected countries)
change over a 12 month period

Source: Office for National Statistics Download chart XLS format (52.5 Kb)

UK Gross Domestic Expenditure on Research and Development 2012

This section covers estimates of R&D performed in and funded by the following four sectors of the economy: Business Enterprise (BERD), Higher Education (HERD), Government (GovERD), which includes Research Councils, and Private Non-Profit (PNP) organisations.

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All these sectors R&D data are known collectively as GERD, which represents the gross domestic expenditure on R&D in the UK. GERD is unique in providing this information, and is the preferred measure of R&D activity for use in international comparisons. Figure 5.1 presents the latest available 2012 estimates as a means of placing the UK into an international context with regards to GERD as a percentage of GDP. It shows the individual EU-28 countries GERD as a percentage of GDP, as well as the average for the EU-28, compared with the Europe 2020 target of 3%. The UKs GERD represented 1.72% of GDP in 2012, the joint 12th highest percentage.

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Figure 5.1: EU countries GERD as a percentage of GDP (R&D intensity), 2012

Source: Office for National Statistics Download chart XLS format (28.5 Kb)

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Background notes
1. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Copyright
Crown copyright 2014 You may use or re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk. This document is also available on our website at www.ons.gov.uk.

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