Every year the ONS improves its estimate of the size of and growth in the UK economy – known as GDP – by including new data sources and updating methods. Craig McLaren explains how these numbers have been updated this year and how it changes our understanding of the economy.
This year we have introduced two important improvements into our measure of Gross Domestic Product (GDP). Firstly, we have brought in the results of the Annual Survey of Goods and Services (ASGS). Similar to the Prodcom survey used for manufacturers, ASGS gives us far more detail about what services, and in some cases manufacturing of products, are being undertaken by companies primarily operating within the services sector. Incorporating this information into our estimates of GDP, has led us to revise upwards our estimates of services output over a number of years and provides a more complete picture of how different parts of the economy contribute to GDP.
Secondly, we have improved our estimates of actual and imputed rentals, increasing consistency with our private rental statistics. Imputed rentals estimate how much it would cost homeowners to rent their own property.
Now this might seem a strange calculation to include but it is used for two reasons. It allows the UK economy to be more easily compared with neighbouring countries with much lower levels of home ownership – such as France – as the higher rental expenditure would make those economies seem larger without the rental equivalence adjustment.
Also, if rental equivalence was not included and home ownership was to decline, with more people moving into renting, GDP would be artificially boosted, as the growth in the rental market would not be offset by a corresponding fall in imputed rent.
We have made significant quality adjustments to our rental and imputed rental data this year, which take account of more information about the UK’s housing stock, such as property type, number of bedrooms or floor area. The effect of this is to reduce the contribution to the level of GDP from actual and imputed rental since 1997, although as the effect is larger in earlier years, this makes a modest upward contribution to GDP growth in some years.
Taken together we see rentals having a larger downward impact on total GDP levels in earlier years, and the new survey seeing larger upward impacts in later periods.
In cash terms, when looking at where the economy now stands compared with previous estimates, it is now 0.5% larger in 2024 than we estimated previously. Across 1998 to 2024 as a whole, volume annual GDP growth is slightly higher, though still remains around 1.8%, while average quarterly growth has remained at 0.5%. Cumulatively, between 1997 and 2024 we previously estimated that the economy grew 59.2%. However, using these new figures we now estimate it was 61.7%.
Looking at each year, the largest annual upward revision was in 2017 (+0.3 percentage points) while the largest downwards were in 2005 and 2022 (-0.1 percentage points).
This increase in the size of the economy is driven by a larger service sector, which now makes up 81.2% of the economy in 2024, an increased share from 80.4% on previous estimates, as the new survey finds more goods produced in the services sector. Within services, information and communication, and administrative and support service activities are the biggest contributors to this increase.
On the expenditure side, there is a small increase in the contribution of net trade to GDP, as we estimate that many of the additional goods identified as being produced are likely to be exported.
It is sometimes suggested that our data tend to be revised upwards. But new analysis we published recently shows that since 2000 revisions have, on average, been both small and not significantly different from zero, though they have tended to be larger and upward in the aftermath of significant economic shocks, such as the global financial crisis or the Covid-19 pandemic. We routinely examine the drivers of our revisions and seek to adjust our methods and find new data sources to reduce their size in the future.
Often, where revisions are upwards it is due to a widening of what activity is included within the GDP boundary – such as when we began to include research and development or illegal activities – which by construction increase the overall size of GDP estimates. In that context we are currently working to bring investments in data into the measure of GDP.
This year the main cause of upward revisions is the Annual Survey of Goods and Services, which has allowed us to better account for the output of companies within the service industries.
Today’s figures provide an early indication of how Blue Book 2026 will change our measure of the economy. These source and method improvements will be incorporated into headline GDP from September, when we will bring forward revisions to include data up to the second quarter of 2026. This year’s changes show how new evidence can deepen our understanding of where economic activity takes place and how different parts of the economy contribute to growth.
Improving economic statistics is an ongoing process and as the economy evolves we will continue to develop our data and methods so that our estimates provide the most complete picture possible of the UK economy. We will continue to keep our users up-to-date with the improvements we are making and welcome feedback at blue.book.coordination@ons.gov.uk
Craig McLaren, Head of National Accounts