Britain’s economy is going to change abruptly and profoundly in four months’ time – at least on paper. For the first time in 15 years, the Office for National Statistics (ONS) will in September tear up the way it measures the economy, to take account of new international standards and to make the UK as comparable as possible with other countries. If the ONS’s preview on Thursday was anything to go by, the results will be dramatic. Altogether, the changes planned for September will add between 4 and 5 per cent to the level of gross domestic product in 2009 – the most recent year for which the ONS has calculated the figures so far. The path of real GDP growth is also likely to change, although statisticians have not calculated that yet. Prostitutes and drugs dealers (estimated to be worth £10bn) are not the only ones who are set to play a bigger role in the economy. They will be joined by people who build their own houses: the ONS thinks it will add £4bn to the economy. Bankers will chip in too: the ONS will change the way it measures “FISIM” – the gap between interest paid to and received from banks – which will add another £5bn to GDP. On the other side of the ledger, some adjustments to the measurement of investment and stock building will reduce the level of GDP by about £10bn. But Thursday’s announcements are only the beginning. New global accounting standards will also be applied to the national accounts in September. Under these rules, research and development spending will count towards GDP, rather than being seen as a cost of production, and building aircraft carriers and other weapons will also add to the economy’s size. One of the biggest changes will be in how savings are measured. The official figures will start to count future pension rights as if they were present income.
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