ONS Economic Forum 13 May 2024

1. ONS Economic Forum
Chair – Sumit Dey-Chowdhury
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Deputy Director
Economic and Microdata Insights
Office for National Statistics

2. Agenda
09:30am – 09:35am Welcome and introduction – Sumit Dey-Chowdhury, Deputy Director, Economic and
Microdata Insights, Office for National Statistics
09:35am – 09:50am State of the UK economy – Grant Fitzner, Chief Economist, Office for National Statistics
09:50am – 10:05am Management Expectation Survey – Christina Palmou, Economist, Office for National
Statistics
10:05am – 10:15am Public Sector Net Debt – Graeme Chamberlin, Economist, Office for National Statistics
10:15am – 10:25am Questions and answers
10:25am – 10:30am Closing remarks – Sumit Dey-Chowdhury, Deputy Director, Economic and Microdata
Insights, Office for National Statistics
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3. State of the UK Economy
Back to normal?
Grant Fitzner
Chief Economist, ONS
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4. Economic growth
A buoyant recovery?
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5. UK GDP grows at its fastest pace for 2 years
Source: Office for National Statistics – First Quarterly Estimate
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
Q2 2023 Q3 2023 Q4 2023 Q1 2024
Contributions to quarterly real GDP growth
by expenditure component
Consumption
Government
Investment
Net trade
GDP growth
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6. A shallow and short-lived economic downturn
Source: Office for National Statistics – First Quarterly Estimate
Note: Pre-recession quarter = 100
Source: Office for National Statistics – First Quarterly Estimate
93
94
95
96
97
98
99
100
101
102
0 2 4 6 8 10 12 14 16 18 20 22
Quarters after the Pre-recession peak
UK GDP recession and recovery paths
Q2 1973 Q4 1979
Q2 1990 Q1 2008
Q2 2023
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
Q2 2023 Q3 2023 Q4 2023 Q1 2024
Contributions to quarterly real GDP growth
by expenditure component
Consumption
Government
Investment
Net trade
GDP growth
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7. Positive services, construction leading indicators
Source: S&P Global PMI, ONS – Index of Services
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Source: ONS New orders in construction industry and Barbour ABI; Great Britain
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024
Construction new orders, quarterly % change
New housing orders
Other work orders
All new work
-15%
-10%
-5%
0%
5%
10%
0
10
20
30
40
50
60
70
80
Jan 2018 Mar 2019 May 2020 Jul 2021 Sep 2022 Nov 2023
Services Activity PMI and Index of Services,
quarterly growth, 2017 -2024
Services PMI (LHS)
Index of Services (RHS)

8. Inflation
Heading lower
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9. Food and goods price inflation steadily falling
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Jan 2021 Jul 2021 Jan 2022 Jul 2022 Jan 2023 Jul 2023 Jan 2024
Annual growth in consumer goods prices
All goods Durable goods
Semi-durable goods Non-durable goods
Non-energy industrial goods
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Jan 2021 Jul 2021 Jan 2022 Jul 2022 Jan 2023 Jul 2023 Jan 2024
Annual growth in CPI & PPI food indices
Domestic food materials (PPI)
Imported food materials (PPI)
Processed food and non-alcoholic beverages (CPI)
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10. Energy prices lower, but oil prices a potential risk
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£0 pa
£500 pa
£1000 pa
£1500 pa
£2000 pa
£2500 pa
£3000 pa
£3500 pa
£4000 pa
£4500 pa
Q1
2019
Q3
2019
Q1
2020
Q3
2020
Q1
2021
Q3
2021
Q1
2022
Q3
2022
Q1
2023
Q3
2023
Q1
2024
Default Tariff and Energy Price Guarantee
Energy Price
Guarantee (EPG)
Default tariff price cap
(direct debit)
Source: OFGEM
60
65
70
75
80
85
90
95
100
Jan 2023 Apr 2023 Jul 2023 Oct 2023 Jan 2024 Apr 2024
$ per barrel
Brent crude oil futures, daily
Source: U.K. ICE Futures Europe

11. CPI expected to reach Bank’s 2% target soon
0%
2%
4%
6%
8%
10%
12%
14%
Q2 2021 Q2 2022 Q2 2023 Q2 2024 Q2 2025 Q2 2026 Q2 2027
Bank of England CPI projections, 2021 to 2024
Feb 22 Aug 22
May 23 Nov-23
May 24 CPI
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[CELLRANGE]
-1%
0%
1%
2%
3%
4%
5%
6%
Jan 2020 Jan 2022 Jan 2024 Jan 2026
Central bank policy rates and forward curves
Bank Rate (UK)
Federal Funds Rate (US)
ECB deposit rate (Euro area)
Source: Bank of England - Monetary Policy Reports Source: Bank of England - Monetary Policy Reports

12. The ‘normalisation’ of the UK economy?
After a turbulent 4-year period, the UK economy appears to be
headed back to more normal ranges for most key economic indicators
• After a shallow, short-lived economic downturn, UK has seen a
strong recovery – with leading indicators pointing to further growth
• After the highest prices rises in more than 40 years, it is widely
expected inflation will soon return to around 2%
• After the tightest labour market since records began, most measures
(aside from pay) are back around their long-term averages
• Meanwhile, real pay growth and the prospect of lower interest rates
should help households recover from recent cost of living pressures
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13. Economist
Office for National Statistics
The Management and
Expectations Survey 2023:
Key findings
Christina Palmou
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14. Background
This is the third wave of the Management and Expectations Survey, following the
2017 and 2020 waves, and expanded to cover Northern Ireland.
Research shows that management matters. Structured management practices
are strongly correlated with firm-level productivity, profits, innovation, and
survival.
The MES dataset is available to accredited researchers, allowing management
practices to be used to broader research questions.
Understanding the role of management practices is important in informing
economic growth
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15. Four dimensions of management
• Continuous Improvement
• Key Performance Indicators
• Targets
• Employment Practices
Building on ONS (2018, 2021) and earlier work by Bloom, Sadun and Van
Reenen (2013) we derive a management score based on:
• Firms score 0 if they do not respond to ongoing problems, base promotion decisions
on factors other than merit, and do not track performance or set targets.
• Firms score 1 if they continuously review their processes with the aim to minimize
future challenges, carry out regular performance reviews, train employees and base
hiring and promotion decisions on merit.
Management practice scores range from 0 to 1
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16. Management practices
across the UK and GB,
2016 to 2023
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17. Overall management practices have improved since 2016
Changes in overall management practice scores, whole sample, UK and Great Britain, 2016 to 2023
• Overall management practices
have improved since 2016, and
have increased from 0.51 in 2020
• The mean management score in
2023 was 0.57, and the median
score 0.61
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18. Employment practices have seen the largest improvement, but KPIs are
lagging
Average management practices scores by management practices categories, UK & Great Britain, 2016
to 2023
• Continuous improvement has
remained the highest scoring
component of the
management score with a
mean of 0.81
• Employment practices saw
the greatest improvements in
management scores from
0.52 to 0.64
• KPIs continue to be the lowest
scoring component at 0.42
0.00 0.20 0.40 0.60 0.80 1.00
Continuous Improvement
KPI
Targets
Employment practices
Overall score
Management Practices Score
2023
2020
2019
2016
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19. Management practices
by firm size, industry
and region
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20. Management practice scores in large firms remain higher than in small
firms
Distribution of management practice scores by employment size bands, UK, 2023
• Large firms (250+) employees
continue being better
managed than small firms (10-
19 employees) by 0.13
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Density
Management Practice Score
10 to 19 20 to 49 50 to 99 100 to 249 250+
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21. Management practice scores are higher in the service industries
Distribution of management practice scores by by industry groups, UK, 2023
• On average service sector firms
have higher management practice
scores than production sector firms.
• Firms in the non-manufacturing
production and construction
industries also have a longer tail of
poorly managed firms.
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22. Management practice scores in London and the East of England lead
the rest of the United Kingdom
Mean management practice scores by ITL1 region, UK, 2016 to 2023
• Management practice scores
are highest in London and the
East of England (both 0.59) in
2023. They are lowest in
Northern Ireland (0.53) and
Scotland (0.54).
• Management scores have
improved in all regions
• The largest score
improvement since 2020 was
in the East of England (From
0.50 to 0.59)
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23. The relationship between Management Practice Scores and individual
firm characteristics
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24. The relationship between Management Practice Scores and individual
firm characteristics
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25. Improving management
practices across firms
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26. Firms with higher management scores are more likely to seek formal
training.
Responses to “What do managers commonly do to improve the way this business is managed?” at the bottom and top deciles
of management practices score compared to the average response, UK, 2023
• 89% of firms are taking some
action to improve the quality
of their management.
• Employee consultation is the
most common action (64%),
while government funded
training & hiring management
consultants is much less
common (both 13%).
0% 20% 40% 60% 80% 100%
Government funded training
Formal training in person
Formal training online
Consult employees about areas of
improvement
Hire management consultants
Conduct own experimental changes to
management practices
Read management literature
Do nothing
Activities not named here
% firms
Bottom decile Mean Top decile
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27. Barriers to change are common between better and worse managed
firms.
Responses to “What is the main barrier to improving the way this business is managed?”
• Reported barriers to change
are relatively consistent
between better and worse
managed firms.
• Time to consider or implement
changes is the most common
barrier to improvement.
0% 10% 20% 30% 40%
Available information not specific to my
business
Other barriers
Conduct own experimental changes
Changes too risky
Available information is too low quality
Changes involve too much disruption
Employees are resistant to changes
Changes too expensive
There are no barriers
Too little time to think about or implement
changes
% of firms
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28. Management practices
and technology
adoption in the UK
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29. In 2023, what type of data analyses are typically used to support key
decisions in this business.
% of firms in the top and bottom deciles of management practice score using different types of analysis compared to
the population average, UK, 2023
• Better managed firms are
twice as likely to use complex
analysis to support key
business decisions.
• Firms with below median
management scores are 4x
more likely to use little to no
analysis when making key
business decisions
0% 20% 40% 60% 80% 100%
Uses little to no analysis
Use of summary statistics
Use of trends and comparisons across time
periods
Use of dashboards and interactive analysis
Use of statistical or forecasting models
Use of algorithmic models (eg. Machine
learning)
Other data analysis
% of firms
Bottom decile Mean Top decile
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30. Better managed firms are more likely to adopt advanced technologies
Proportion of firms which have tested, adopted or are considering to use AI
• 1 in 6 businesses with 10+
employees have tested or
adopted AI
• 38% of firms in the top decile
have tested or adopted AI,
compared to only 3% in the
bottom decile.
• Better managed firms are
more likely to identify AI as
relevant, than less well
manged firms.
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31. Conclusion
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32. Summing up
• Management practice scores averaged 0.57 in 2023, up from 0.51 in 2020
• Driven by an improvement in the scores of firms with management scores below the median
• Firms in the services sector had higher average management scores (0.58)
than firms in the production sector (0.54)
• Across industries, firms with more employees continued to have higher scores
in 2023
• Almost nine in ten (89%) firms surveyed in 2023 reported taking some action
to improve management quality
• 17% of firms in the UK with 10 or more employees said they had tested or
adopted some form of Artificial Intelligence
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33. Economist
Office for National Statistics
The effects of the
economy on Public
Sector Net Debt
Graeme Chamberlin
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34. Public sector net debt (PSND)
• Headline measures exclude the public sector banks (PSND ex).
Commonly referred to as the “National debt”
• Estimates for the latest financial year (FY 2023-24) are in the
March 2024 Public Sector Finances release
• There has been a persistent increase over the last two decades
and now the national debt is close to 100% of annual GDP
• The effects of the economy on PSND published last Friday
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35. PSND ex at the end of each FY (%GDP)
0
50
100
150
200
250
300
1900-01
1905-06
1910-11
1915-16
1920-21
1925-26
1930-31
1935-36
1940-41
1945-46
1950-51
1955-56
1960-61
1965-66
1970-71
1975-76
1980-81
1985-86
1990-91
1995-96
2000-01
2005-06
2010-11
2015-16
2020-21
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36. The dynamics of the national debt
The change in PSND ex as a percentage of GDP from one financial year (FY)
to the next reflects three factors:
1. The growth adjusted-interest rate (i-g): where i is the effective interest
rate on debt and g the growth rate of nominal GDP
2. The primary deficit: the gap between receipts and expenditure on goods
and services and investment
3. The stock-flow adjustment: reclassifications, revaluations, and sales
and purchases of illiquid financial assets
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37. Each FY change in PSND ex as a % of GDP (p.p.)
-10
-5
0
5
10
15
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Growth-adjusted interest rate Primary deficit Stock-flow adjustment Total
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38. Cumulative change in PSND ex as a % of GDP (p.p.)
-20
-10
0
10
20
30
40
50
60
70
80
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
Growth-adjusted interest rate Primary deficit Stock-flow adjustment Total
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39. Summing up
 Public sector net debt excluding the public sector banks (PSND ex) was
98.3% of GDP at the end of the financial year 2023-24 – a notable increase
of more than 60 percentage points over the last two decades
 The increase in PSND ex almost entirely reflects the accumulation of
primary deficits – reflecting borrowing to fund the government’s day-to-day
activities
 Over the last two decades there has been a succession of greater than
normal primary deficits due to a series of negative economic shocks
 These include the global financial crisis (2007-08), the coronavirus (COVID-19)
pandemic (2020-21), and the European energy price crisis (2022-23)
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40. Closing remarks
Sumit Dey-Chowdhury
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Deputy Director
Economic and Microdata Insights
Office for National Statistics
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41. Forthcoming ONS economic analysis
14 May 2024 Labour Market Theme Day
22 May 2024 Prices Theme Day
22 May 2024 Public sector finances, UK: April 2024
23 May 2024 Young people not in education, employment or training (NEET), UK: May 2024
24 May 2024 Retail sales, Great Britain: April 2024
29 May 2024 Working and workless households in the UK: January to March 2024
30 May 2024 Household costs indices, UK: January 2024 to March 2024
30 May 2024 Job switching and earnings growth, UK: April 2012 to April 2023
31 May 2024 Healthcare expenditure, UK Health Accounts: 2022 and 2023
All information on upcoming analysis can be found via the ONS website
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42. Upcoming ONS events
• Tuesday 14 May 2024 – ONS Local presents: Measuring the Green Economy
• Wednesday 22 May – ONS Local presents: Using Visa data to understand spending flows
in the UK
• Monday 17 June 2024 – ONS Economic Forum
We will be showcasing the latest economic and social developments including a wide range of
analytic topics. Each month we will feature ‘State of the Economy,' providing a stocktake of the
latest trends and developments. Registration to open shortly.
• Tuesday 18 June – ONS Local presents: Local economic growth with What Works Growth
• Thursday 11 July – Tools for the local authority analyst: Stat-Xplore
Further details at: ons.gov.uk/economicevents
or https://www.eventbrite.co.uk/o/the-office-for-national-statistics-33407052803
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43. Producer Price Inflation (PPI) Survey
We are reviewing our Producer Price Inflation (PPI) statistics with the aim of refining our publications
to better meet the needs of users of these statistics.
On Wednesday 20 March we launched a survey that is open until 22 May 2024. We invite you to
take part as your input is key to the outcomes of the review. PPI statistics measure change in prices
of goods bought and sold by manufacturers, including imports and exports, and the prices of
services provided to UK customers for a selection of industries.
You can access the survey at: https://consultations.ons.gov.uk/external-affairs/user-needs-from-
producer-price-inflation
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44. Thank you for attending the
Economic Forum
You can keep up to date on all upcoming events via
ons.gov.uk/economicevents
If you would like to ask a question or provide any feedback, please do so
via economic.engagement@ons.gov.uk