Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
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ONS Economic Forum 18 March 2024.
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Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
- 1. ONS Economic Forum Chair – Sumit Dey-Chowdhury @ONSfocus #ONSEconForum slido #36905 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 – 10:00am The role of owner-occupier housing costs in the Household Cost Indices – Stefan Ubovic, Head of Prices Economic Analysis, Office for National Statistics 10:00am – 10:10am Progress and Insights from the Research and Development Statistics transformation – Laura Haddock, Assistant Deputy Director, Annual Surveys, Surveys and Economic Indicators Office for National Statistics 10:10am – 10:25am Questions and answers 10:25am – 10:30am Closing remarks – Sumit Dey-Chowdhury, Deputy Director, Economic and Microdata Insights, Office for National Statistics @ONSfocus #ONSEconForum slido #36905
- 3. State of the UK Economy March 2024 Grant Fitzner Chief Economist Office for National Statistics @ONSfocus #ONSEconForum slido #36905
- 4. GDP ticks up in January but broadly flat on quarter -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% Jan 2022 May 2022 Sep 2022 Jan 2023 May 2023 Sep 2023 Jan 2024 Change in monthly GDP, Jan 2022 - Jan 2024 Month-on-month 3 month-on-3 month Source: ONS Monthly GDP 98 100 102 104 106 108 110 2022Q1 2023Q1 2024Q1 2025Q1 2026Q1 2027Q1 2028Q1 2029Q1 UK Real GDP levels projections OBR Nov-23 OBR Mar-24 BoE Nov-23 BoE Feb-24 Source: OBR Economic and Fiscal Outlooks, Bank of England Monetary Policy Reports Note: Q1 2022 = 100 @ONSfocus #ONSEconForum slido #36905
- 5. Business outlook is becoming more optimistic Source: ONS Business Insights and Conditions Survey Source: S&P Global PMI, ONS Quarterly National Accounts -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 10 20 30 40 50 60 70 Jan 08 Jan 10 Jan 12 Jan 14 Jan 16 Jan 18 Jan 20 Jan 22 Jan 24 q/q change SA, 50 = no change S&P Global UK PMI vs UK GDP GDP, quarter on quarter growth (RHS) PMI Composite Output Index (LHS) 0% 5% 10% 15% 20% 25% 30% 35% Mar-22 Sep-22 Mar-23 Sep-23 Mar-24 Main business concerns Competition Energy prices Falling demand Inflation/prices Interest rates/mortgages Supply chain disruption @ONSfocus #ONSEconForum slido #36905
- 6. Households more upbeat, housing may be picking up 0 20,000 40,000 60,000 80,000 100,000 70 75 80 85 90 95 100 105 110 115 Jan 2021 Jul 2021 Jan 2022 Jul 2022 Jan 2023 Jul 2023 Jan 2024 Private housing output and mortgage approvals Private new housing output (LHS) New mortgage approvals (RHS) Source: ONS Output in the construction industry & Bank of England Money and Credit -45 -35 -25 -15 -5 5 15 Jan- 19 Jul-19 Jan- 20 Jul-20 Jan- 21 Jul-21 Jan- 22 Jul-22 Jan- 23 Jul-23 Jan- 24 Personal financial situation of households Last 12 Months Next 12 Months Source: GfK Consumer Confidence @ONSfocus #ONSEconForum slido #36905
- 7. Labour market tightness easing; real wages higher -4% -2% 0% 2% 4% 6% 8% Jan to Mar 2001 Mar to May 2005 May to Jul 2009 Jul to Sep 2013 Sep to Nov 2017 Nov to Jan 2022 Average weekly earnings annual growth Regular pay (real) Regular pay (nominal) Source: ONS Average weekly earnings in Great Britain 0.0 0.2 0.4 0.6 0.8 1.0 1.2 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Jan-Mar 2019 Jan-Mar 2020 Jan-Mar 2021 Jan-Mar 2022 Jan-Mar 2023 Thousands Level of unemployment and vacancies, and the vacancy-unemployment ratio Vacancies (LHS) Unemployment (LHS) V/U (RHS) Source: ONS Vacancies and unemployment @ONSfocus #ONSEconForum slido #36905
- 8. Public sector net debt highest since early 1960s Source: ONS Public Sector Finance and OBR projections 0% 20% 40% 60% 80% 100% 120% 140% 2006-07 2009-10 2012-13 2015-16 2018-19 2021-22 2024-25 2027-28 Public Sector net debt excluding Bank of England Outturn March 2024 pre-measures forecast March 2024 forecast November 2023 forecast Source: ONS Public Sector Finance and National Accounts 0% 50% 100% 150% 200% 250% 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011 2021 Public sector net debt as a % of GDP @ONSfocus #ONSEconForum slido #36905
- 9. Conclusions • While UK GDP fell in 2H 2023, growth picked up in January and is forecast to improve through 2024 • Business outlook more optimistic as energy and inflation challenges ease, but demand and competition a concern • Households are more upbeat, helped by real wage gains • Labour market tightness continues to gradually soften • Public sector net debt at its highest since the early 1960s, and expected to remain high in coming years @ONSfocus #ONSEconForum slido #36905
- 10. Head of Prices Economic Analysis Office for National Statistics The role of owner-occupiers housing costs in the Household Cost Indices Stefan Ubovic @ONSfocus #ONSEconForum slido #36905
- 11. Housing costs are outpacing food and energy prices as the largest contribution to the annual increase in household costs Note: Housing shelter includes private rentals, social rentals, and owner-occupiers' housing costs. Household energy includes electricity, gas, liquid, and solid fuels. Household services includes repairs of dwelling services and materials, water supply, sewage collection, council tax, and UK holiday rents. Together, housing shelter, household energy, and household services are the component parts of the Housing, Water, Electricity, Gas and Other Fuels division. Source: ONS @ONSfocus #ONSEconForum slido #36905
- 12. Owner occupiers’ housing costs include three main items: mortgage interest payments, stamp duty, and other costs Source: ONS Source: ONS @ONSfocus #ONSEconForum slido #36905
- 13. Higher mortgage rates are pushing up interest payments albeit this is partly offset by higher income from savings Note: Fixed-rate mortgages account for 88% of total mortgages, of which 26% is up to 2 years and 68% is 5 years; Source: Bank of England, ONS @ONSfocus #ONSEconForum slido #36905
- 14. More households are using savings and/or borrowing more compared with a year ago Source: ONS Opinion and Lifestyle Survey Source: ONS Opinion and Lifestyle Survey @ONSfocus #ONSEconForum slido #36905
- 15. Key takeaways Mortgage interest payments and rents have overtaken food and energy prices as the main contribution to the annual increase in household costs This has led to costs increasing faster for higher-income households compared with lower- income households Households with the largest mortgages were the most exposed, which often includes working-age households, with children, and/or above-average disposable income Mortgage payments will keep increasing as long as quoted interest rates on new mortgages remain higher than mortgage rates on expiring fixes More households are using savings and/or borrowing more compared with a year ago, with mortgagors having higher savings and better financial resilience compared with renters @ONSfocus #ONSEconForum slido #36905
- 16. Assistant Deputy Director Annual Surveys, Surveys and Economic Indicators Office for National Statistics Progress and Insights from the Research and Development Statistics transformation Laura Haddock @ONSfocus #ONSEconForum slido #36905
- 17. Mission Statement Mission Vision Drivers Objectives Review and development of R&D statistics completed UK R&D statistics are internationally recognised and trusted as high quality and responsive to user needs Differences between ONS/HMRC estimates New data sources Levelling up Need to conduct a review of R&D statistics Understand and explain differences between BERD and HMRC R&D estimates Use administrative data sources alongside survey data Provide more granular level statistics Be flexible and adaptive to user needs @ONSfocus #ONSEconForum slido #36905
- 18. User concerns Resulted in Action taken Ten-fold increase in sample size covering all businesses (informed by admin data) Unbiased estimates & more granularity e.g. products by size of business Online collection with in-built validation and new processing systems Improved respondent experience Increase response & efficiencies Better targeted and higher proportional collection of more detailed information Better quality data on where and what R&D activity is being done Improved guidance around R&D definition Better measurement of R&D Business Enterprise R&D changes Sample Relevance Detail Definition @ONSfocus #ONSEconForum slido #36905
- 19. Headlines 0 10,000 20,000 30,000 40,000 50,000 60,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 Expenditure on R&D, 2022, £m (Current Prices) @ONSfocus #ONSEconForum slido #36905
- 20. Expenditure by region North East North West Yorkshire and the Humber East Midlands West Midlands East of England London South East South West Wales Scotland Northern Ireland @ONSfocus #ONSEconForum slido #36905
- 21. Expenditure by product group 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2022 Manufacturing Services Other 0 2,000 4,000 6,000 8,000 10,000 Pharmaceuticals Miscellaneous business activities; Technical testing and analysis Software development Motor vehicles and parts Research and development services Computer programming and information service activities, excluding software development Construction Aeropsace BERD 2022 @ONSfocus #ONSEconForum slido #36905
- 22. Largest R&D industries 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Scientific research and development Computer programming, consultancy and related activities; Information service activities Architectural and engineering activities; technical testing and analysis Manufacture of other transport equipment, including aerospace Manufacture of computer, electronic and optical products Construction Legal and accounting; Activities of head offices; management consultancy activities Wholesale trade 72 62-63 71 30 26 41-43 69-70 46 Intramural R&D expenditure by A64 industry group, 2022, £m @ONSfocus #ONSEconForum slido #36905
- 23. R&D is still concentrated in particular products and industries Top 5 product groups % of total Top 5 industry groups % of total Current BERD 2022 59% 55% Past method, BERD 2020 52% 59% @ONSfocus #ONSEconForum slido #36905
- 24. Expenditure by size of business 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2022 0 to 99 employment 100 to 399 employment 400 to 999 employment 1,000 to 4,999 employment 5,000 employment and over
- 25. R&D is less concentrated in large companies Proportion of business intramural R&D in businesses with 250+ workers Proportion of business intramural R&D in businesses with <250 workers Current BERD 2022 60% 40% Past method, BERD 2020 74% 26% @ONSfocus #ONSEconForum slido #36905
- 26. Will result in Action being taken Engage Gov Depts on improving R&D recording (with Go Science) & analyse GovERD survey with new location questions Improved data on location of government funded R&D Understanding impact on other key statistics & preparing for National Account integration Area of focus Government sub-national Onward impact Future R&D improvements Initial indication of impact on GDP and productivity, followed by full integration into National Accounts Opportunity taken to merge PNP with BERD for forthcoming collection Survey rationalisation Survey rationalisation Key sustainability phase across pipeline and opportunities for further improvement (e.g. further refinement of sub-national approach) Ensuring R&D statistics fit for the future and have an affordable and repeatable business process Sustainability @ONSfocus #ONSEconForum slido #36905
- 27. Key points • Business R&D Statistics have undergone major transformation over the last 2 years, improving our statistics • R&D still remains highly concentrated into certain products and industries • Our understanding of what size businesses are carrying out R&D has improved. More R&D is performed by small businesses than we previously estimated • Further transformation is to come, with changes to our other R&D statistics later this year, and continued improvements to our BERD statistics @ONSfocus #ONSEconForum slido #36905
- 28. Closing remarks Sumit Dey-Chowdhury @ONSfocus #ONSEconForum Deputy Director Economic and Microdata Insights Office for National Statistics slido #36905
- 29. Forthcoming ONS economic analysis 19 March 2024 Human capital estimates in the UK: 2004 to 2022 (provisional) 20 March 2024 Prices theme day 20 March 2024 Prices and the inclusion of new rents prices 20 March 2024 Autotrader used car data 21 March 2024 Public sector finances , UK: February 2024 22 March 2024 Public service productivity, healthcare, England: financial year ending 2022 22 March 2024 Retail sales, Great Britain: February 2024 25 March 2024 Consumer card spending: Flow of spending across the UK 25 March 2024 Housing affordability in England and Wales: 2023 26 March 2024 Disaggregating UK annual subnational gross disposable household income (GDHI) to lower levels of geography: 2002 to 2021 26 March 2024 Public service productivity: total, UK: 2021 28 March 2024 Quarterly National Accounts All information on upcoming analysis can be found via the ONS website @ONSfocus #ONSEconForum slido #36905
- 30. Upcoming ONS events • Wednesday 20 March 2024 – Migration Statistics System webinar To provide updates and answer questions relating to long-term international migration statistics. • Thursday 21 March 2024 – Developing estimates of depletion for the UK natural capital accounts ONS's Natural Capital Accounts team present on developing estimates of depletion for the UK natural capital accounts. • Monday 15 April 2024 – Producer Price Inflation webinar 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. This webinar is in conjunction with the recent published Producer Price Inflation (PPI) Survey. Registration to open shortly. • Monday 22 April 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. Further details at: ons.gov.uk/economicevents @ONSfocus #ONSEconForum slido #36905
- 31. Upcoming ESCoE webinars 21 March 2024 – Depletion and degradation in the UK Natural Capital Accounts. Presented by Aram Hawa, Senior Research Officer, Office for National Statistics Further details can be found at: escoe.ac.uk/webinars @ONSfocus #ONSEconForum slido #36905
- 32. ESCoE Conference on Economic Measurement 2024 Wednesday 15 May 2024 — Friday 17 May 2024 Alliance Manchester Business School, Booth St W, Manchester, M15 6PB Registration for the ESCoE Conference on Economic Measurement 2024 is now open. For further information and to register to attend the conference please visit https://www.escoe.ac.uk/events/escoe-conference-on-economic-measurement-2024-registration- open/ @ONSfocus #ONSEconForum slido #36905
- 33. 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 will launch 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. We will also be hosting a webinar on 15 April, which you will be able to register for shortly. From Wednesday 20 March you can access the survey at: https://consultations.ons.gov.uk/external- affairs/user-needs-from-producer-price-inflation @ONSfocus #ONSEconForum slido #36905
- 34. 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
Editor's Notes
- R&D statistics have been on a bit of a journey over the last few years, and a significant transformation Since 2022 we have been working to improve the statistics, addressing known issues, like differences between the estimates of R&D from HMRCs tax credits data as well as improving the experience for businesses completing the survey and for our users
- Today saw the publication of the second phase of our BERD statistics. We will be taking you through the key outputs from this later in the presentation, and now we will discuss the key improvements we have made. The transformation has looked to address a wide range of user concerns to help improve the statistics we have. Improved our sample in line with best practice design, previously sampled just 4000 businesses from a very specific universe of businesses that told us they carried out R&D, now sample 40,000 businesses directly from the IDBR and using administrative data to inform. This allows us to have confidence in a unbiased estimate, and confidence in some of the granular estimates. To remain relevant, we have moved our collection online, supporting businesses to respond efficiently and easily to our questionnaire, with in built validation to support them in accurate reporting. This has improved respondent experience as well as increase our overall response rate and efficiency in processing our data collection. To ensure our statistics produce the granular level of information users require, we have better targeted and increased the number of businesses who receive our more detailed questionnaire. This has allowed us to have better quality data on where and what R&D activity is done. R&D is a complex topic, and we acknowledge it can be difficult for our responding businesses to understand the concepts. We have improved guidance around the R&D definition, particularly for our less resource intensive R&D industries. This helps make sure we are capturing all R&D activity across industries.
- At the headline level, R&D has continued on its upward trend, increasing by £3bn in 2022 to £49.9bn This is the only comparison that I’ll be showing across time. With all the changes improving the volume of granular data we can produce we’ve identified a few areas where further work is needed before we will publish a time series. We are hoping that this will be ready for late spring.
- In 2022 at the regional level, the majority of R&D is carried out in the greater South East, (London, South East and East of England). Toegther these 3 regions account for 56.7% of Business R&D This largely reflects known R&D Hubs, for example in Cambridge On the other end of the spectrum, the region with the smallest investment in R&D was the North East, accounting for just 1.5% of R&D
- Moving on to look at another key breakdown – expenditure by product group. On the left hand side we’ve grouped this expenditure broadly into Manufacturing, Services and other. You can see that expenditure on Manufacturing products, and on Services products is approximately the same, with expenditure on manufacturing products being £24bn, and services products being £23bn Beneath this we can look at specific product groups: Pharmaceuticals £8.9bn (17.9%) Misc Biz Act £7.1bn (14.3%) Software development £6.4bn (12.8%) Motor vehicles and parts £3.8bn (7.6%) R&D services £3.2bn (6.4%) Computer program etc £2.6bn (5.1%) Construction £2.1bn (4.1%) Aerospace £2.0bn (4.1%)
- Another way to look at this data is to compare the expenditure by industry. This shouldn’t be too surprising given what we know about product groups. Scientific R&D £12.2bn, (24.5%) Computer programming etc £6.9bn (13.9%) Architectural etc £4.6bn (9.2%) Manufacture of other transport inc aerospace £2.1bn (4.1%) Manufacture of computer etc £1.8bn (3.6%) Construction £1.8bn (3.6%) Legal and accounting, head offices etc £1.6bn (3.3%) Wholesale trade It’s worth mentioning though that there isn’t a direct overlap of product group and industry spending. Although much expenditure on software development will be in industries 62-63 (computer programming etc), you will actually find that almost every industry carries out some R&D in software development to support their own industry use
- We know that our methodology has given us greater insight into some products, industries, regions and businesses, but our new methodology confirmed that R&D is concentrated in very few products and Industries The top 5 of each accounting for more than 50% of R&D. Something that is unchanged from our earlier methodology
- Another interesting breakdown is looking at R&D by business size. When you think about R&D you might be picturing quite large businesses carrying out R&D But here you can see that almost 1/3 of R&D is carried out by businesses employing fewer than 100 individuals
- This doesn’t surprise us too much, as it was one of the key drivers behind the transformation and improvements Comparing the estimates under our old methodology and our new methodology, we can see that R&D is less concentrated in large businesses With the proportion of R&D accounted for by businesses employing more than 250 workers reducing from 74% under our old methodology, to 60% in our new methodology. This is reassuring as we understood from other sources, that our old methods were probably not capturing small businesses properly This change is as a direct result of the changes to our sample, as the universe we previously sampled from didn’t have as many small businesses There is a lot more information available in the publication Business Enterprise R&D statistics such as breakdowns of civil and defence spending on R&D and the types of R&D employment and application.
- Looking to the future the transformation isn't over We're also making improvements to our GovERD survey, to improve our region based estimates Taking opportunities to rationalise surveys, and consolidating the PNP with BERD Understanding the impact on key statistics, for example the National Accounts. We hope to produce an early indication of what these changes could mean for GDP, before full integration Sustainability - fit for purpose, affordable and repeatable business process