GDP quarterly national accounts, UK (2024)

• UK gross domestic product (GDP) is estimated to have increased by an unrevised 0.1% in Quarter 1 (Jan to Mar) 2023.

• In output terms, the services sector grew by 0.1% on the quarter driven by increases in information and communication, and administrative and support service activities; elsewhere, the construction sector grew by a revised 0.4% (previously 0.7%), while the production sector grew by 0.1%, with a revised 0.6% growth in manufacturing (previously 0.5%).

• The GDP implied deflator rose by 6.5% in the year to Quarter 1 2023, primarily reflecting higher cost pressures faced by households.

• The household saving ratio is 8.7% in the latest quarter down from 9.3% in Quarter 4 (Oct to Dec) 2022.

• Real households' disposable income (RHDI) fell by 0.8% following positive growth of 1.3% in Quarter 4 (Oct to Dec) 2022.

• Households experienced simultaneous withdrawals from their deposit accounts and negative secured loans for the first time ever.

UK gross domestic product (GDP) is estimated to have increased by an unrevised 0.1% in Quarter 1 (Jan to Mar) 2023. This follows growth of 0.1% in the previous quarter (Figure 1). The level of quarterly GDP in Quarter 1 2023 is now 0.5% below its pre-coronavirus (COVID-19) level (Quarter 4 (Oct to Dec) 2019).

In line with the National Accounts Revision Policy, revisions are open for Quarter 1 2023 only as part of this publication. While the quarterly path of real GDP is unrevised, there have been some revisions to individual components for GDP. For more information, see Section 6: Revisions to GDP.

Early estimates of GDP are subject to revision (positive or negative), for more information please see ourCommunicating the UK economic cycle methodology.

Nominal GDP is estimated to have increased by 1.2% in Quarter 1 2023, revised up from a previous estimate of 1.0%.

The implied GDP deflator represents the broadest measure of inflation in the domestic economy, reflecting changes in the price of all goods and services that comprise GDP. It is important to note that the GDP deflator covers the whole of the domestic economy, not just consumer spending, and also reflects the change in the relative price of exports to imports. For more information on the implied GDP deflator, see ourMeasuring price changes of the UK national accounts: February 2023 article.

The implied price of GDP rose by a revised 1.0% in Quarter 1 2023 (previously 0.9%) following growth of 1.9% in the previous quarter. Growth in the latest quarter was primarily driven by higher price pressures for household consumption, including the effects of higher food, energy and core price inflation in the UK.

Compared with the same quarter a year ago, there was a 6.5% increase in the GDP implied deflator, revised from a first estimate of 6.3%. In the year to Quarter 1 2023, growth has been driven by strong rises in the price of household consumption, though there was a slowing in how much these prices increased. There have also been large price movements in internationally traded goods and services, because of multi-decade highs in global inflation, although there was a slight easing in these inflationary pressures (Figure 2). Further information on the price movements of trade is discussed in ourThe purchasing power of GDP, UK: 2022 article.

In Quarter 1 (Jan to Mar) 2023, output is estimated to have increased by 0.1% (unrevised from the first estimate). Services and production growth are both unrevised at a 0.1% increase. Construction output increased by 0.4% in Quarter 1 2023, revised down from a first estimate of 0.7% growth.

Services

Services output rose by an unrevised 0.1% in Quarter 1 (Jan to Mar) 2023, following a 0.1% increase in Quarter 4 (Oct to Dec) 2022. Figure 3 shows that there was a mixed performance for the service sub-sectors in the first quarter, with growth in 6 out of the 14 sub-sectors partially offset by falls in the other 8. This position is largely unchanged from the first estimate.

Overall, consumer-facing services detracted from growth in Quarter 1 2023, falling by a revised 0.3%, while all other services increased by 0.2%.

The largest positive contribution to growth was from the information and communication sub-sector, which grew by 1.3%, with increases in computer programming, consultancy and related activities, and telecommunications. The second largest positive contribution to growth was from administrative and support service activities, which increased 1.6%.

However, these increases were partially offset by declines in health (0.8%), transport and storage (1.1%), education (0.6%), and public administration and defence (0.7%). These are areas that saw industrial action take place across the quarter. While some of the direct impact of the strikes in these industries can be seen in the profile of the quarterly changes in output, we are not able to isolate the impact of these strikes from other factors across the wider economy. However, there was anecdotal evidence to suggest industrial action had an impact across a wide range of industries. For further information, please see ourGDP monthly estimate, UK bulletin.

Production

Production output increased by 0.1% in Quarter 1 2023, unrevised from the first estimate. This follows no growth in the previous quarter and five consecutive falls before that.

The increase in production output in the latest quarter was mainly driven by an increase of 0.6% in manufacturing (revised up from a first estimate of 0.5%). This upward revision in manufacturing was offset by a downward revision in mining and quarrying, which is now estimated to have fallen by 5.4% in the latest quarter (previously estimated as a 5.0% fall, reflecting later and revised data).

There were increases in 8 out of the 13 manufacturing sub-sectors. The largest positive contributions were from the manufacture of basic metals and metal products, and the manufacture of computer, electronic and optical products, which increased by 4.0% and 3.2% respectively in Quarter 1 2023 (Figure 4). These increases were partially offset by a fall in the manufacture of basic pharmaceutical products and pharmaceutical preparations, which decreased 4.7%. Figure 4 shows the contributions to manufacturing growth is largely unchanged from the first estimate.

Construction

Construction output rose by 0.4% in Quarter 1 2023, revised down from a first estimate of 0.7%, reflecting revised and new survey data. The growth in Quarter 1 2023 was driven by repair and maintenance, which grew by 4.5% with all three subsectors growing on the quarter. This growth was partially offset by a fall of 2.2% in new work.

There was no change in household consumption in Quarter 1 (Jan to Mar) 2023, while there was higher gross fixed capital formation on the quarter. This was partially offset by a decline in government consumption as well as a decrease in the volume of net trade in Quarter 1 2023.

Figure 5 shows the previous and latest contributions to expenditure in Quarter 1 2023. The impact of revisions on real gross domestic expenditure over this period have been minimal, although there have been upward revisions to business investment and trade. For more information, please refer to the gross capital formation section and net trade section of this bulletin.

Private consumption

Within private consumption, there was no growth in real household expenditure in Quarter 1 2023 (unrevised from the first estimate), following 0.2% growth in the previous quarter, as real household incomes continue to be squeezed by high inflation. There were increases in expenditure on recreation and culture, clothing and footwear, communications, and housing in the latest quarter (Figure 6). These were offset by falls in transport, and alcohol and tobacco. Net tourism is a significant downward driver of national expenditure. This is because of an increase in foreign tourists' expenditure in the UK, which has a negative contribution to the net tourism. Tourism data for Quarter 1 2023 are currently forecast (and therefore subject to future revision) with reference to secondary sources such as passenger numbers through UK airports.

In current price terms, household expenditure rose by 1.3% on the quarter, as recent inflationary pressures increased the nominal value of this spending. The implied price of household expenditure increased by 9.5% when compared with Quarter 1 2022. This was an easing in inflationary pressures from the 10.3% in the year to Quarter 4 (Oct to Dec) 2022, although the rate of the price change in household expenditure is still high by historical standards.

Consumption of government goods and services

Real government consumption expenditure fell by 1.8% in Quarter 1 2023, revised up from a first estimate fall of 2.5%. The upward revision reflects updated estimates on spending on public administration and defence.

Across the quarter, the fall was mainly driven by a decline in nominal spending on public administration and defence. There were also falls in the volumes of education and health, where there were weaker volumes as a result of industrial action taking place in this quarter. However, we are not able to isolate the impact of these strikes from other factors across the wider economy.

Gross capital formation

There was a pickup in gross fixed capital formation (GFCF), which increased by 2.4% in Quarter 1 2023, revised up from a first estimate of 1.3%. The upward revision in GFCF mainly reflects an upward revision in business investment, which is now estimated to have increased by 3.3% (previously estimated at 0.7%) in Quarter 1 2023. These revised estimates show strong growth in business investment in the latest quarter, with anecdotal evidence suggesting that this reflects the bringing forward of investment in response to the super-deduction allowance that enabled companies to cut their tax bill by up to 25 pence for every £1 invested, and which expired on 31 March 2023. For more information, please see our Business investment in the UK bulletin.

Excluding the alignment and balancing adjustments, estimates show that inventories increased by £0.5 billion in Quarter 1 2023, revised up from a fall of £1.8 billion in the first estimate.

Net trade

HM Revenue and Customs (HMRC) implemented a data collection changeaffecting data on goods exports from Great Britain (GB) to the EU in January 2021, and data on goods imports from the EU to GB in January 2022. For more information seeHMRC's Methodology changes to trade in goods statistics from March 2022 article.

We haveapplied adjustments to our estimates of goods imports from the EU for 2021to reflect this data collection change, which brought imports and exports statistics onto a like-for-like basis in 2021, as detailed in ourTrade in goods: Adjustments to 2021 EU imports estimates, by chapter dataset. The full time series for goods imports from and exports to the EU contains a discontinuity from January 2021 resulting from the move from Intrastat to customs declarations, as detailed in ourImpact of trade in goods data collection changes on UK trade statistics: adjustments to 2021 EU imports estimates article. We are continuing to work with HMRC to consider possible options to account for this discontinuity.

Separately, when the requirement for customs declaration was introduced for imports of goods to GB from the EU in January 2022, a new policy of Staged Customs Controls (SCC) was also implemented. This allowed customs declarations to be reported up to 175 days after the date of import for imports of non-controlled goods from the EU to GB. It is likely that some double counting occurred, with imports in the second half of 2021 recorded by the Intrastat Survey, then some appearing again on customs declarations in the first half of 2022. We published anImpact of trade in goods data collection changes on UK trade statistics: update on Staged Customs Controls articleon 17 February 2023, and will publish our Impact of trade in goods data collection changes on UK trade statistics: further update on Staged Customs Controls article on 3 July 2023. Temporary arrangements still apply for imports of goods from Ireland to GB.

The UK's trade deficit for goods and services was 2.0% of nominal gross domestic product (GDP) in Quarter 1 2023, revised down from a first estimate deficit of 1.4%. However, there have been large movements in non-monetary gold over the last quarter, which can be volatile. Excluding non-monetary gold, the trade deficit was 3.0% of nominal GDP in Quarter 1 2023, revised down from a first estimate deficit of 2.3% (Figure 8).

Export volumes fell by 6.9% in the latest quarter, revised up from a first estimate fall of 8.1%. The decrease in total exports was driven by a fall of 13.0% in goods exports (revised down from a 12.9% fall) as well as a 0.3% decrease in services exports (revised up from a 2.9% fall). The fall in goods exports was mainly driven by large movements in non-monetary gold, however this series appears within gross capital formation (GCF) as valuables and so the effect is GDP neutral.

The decline in services exports was driven mainly by other business services, with telecommunications and computer and information services all also contributing to the decrease.

Import volumes decreased by 3.8% in the latest quarter, revised up from a first estimate fall of 7.2%. This decline was driven by a 7.4% decrease in goods imports, driven mainly by machinery and chemicals. The fall in machinery and equipment was driven by cars, following strong growth in the previous quarter.

Services imports is now estimated to have increased by 4.5% in the latest quarter, revised up from a first estimate fall of 5.9%.

Nominal gross domestic product (GDP) rose by 1.2% in Quarter 1 (Jan to Mar) 2023, revised up from a previous estimate of 1.0%. The quarterly rise was driven by growth in gross operating surplus, other income and compensation of employees, partially offset by higher subsidy payments around the Energy Price Guarantee and the Energy Bill Relief Scheme.

Figure 9 shows the previous and latest contributions to nominal GDP in Quarter 1 2023. The impact of revisions on nominal gross domestic income over this period have been minimal, although there have been larger revisions to income components.

Compensation of employees is now estimated to have increased by 1.4% in Quarter 1 2023, revised up from a first estimate increase of 0.6%. The increase was driven by a rise in wages and salaries of 1.8%, revised up from the first estimate of 1.2%.

Revised estimates show that taxes less subsidies fell by 13.9% in Quarter 1 2023, revised from a previous estimate fall of 21.7% where we have received more up-to-date information on recent subsidy payments. This was driven by a large increase in subsidies because of the Energy Price Guarantee Scheme and the Energy Bill Relief Scheme.

In October 2022, the Office for National Statistics (ONS) announced that the Energy Price Guarantee scheme had been classified as a subsidy on products from central government to energy suppliers in the non-financial corporations sector in the UK. For more information, see ourEnergy Price Guarantee classification.

The equivalent support scheme for businesses and non-domestic customers was announced as the Energy Bill Relief Scheme. This scheme will provide a discount on gas and electricity unit prices and the UK government will compensate the suppliers for this reduction. In October 2022, the ONS announced that the scheme had also been classified as a subsidy on products from central government to energy suppliers in the non-financial corporations sector in the UK. For more information, see ourEnergy Bill Relief Scheme classification. This quarter's figure is updated from GDP first quarterly estimate, however this will be revised over the coming months as firmer data become available.

Total gross operating surplus (GOS) of corporations excluding the alignment adjustment, increased by 4.1% (Table 3), reflecting some of the uncertainty around recording the full impacts of the Energy Price Guarantee Scheme. Data content for this component is low at this stage in the GDP publication model. Including the alignment adjustment, total GOS of corporations increased by 5.1% in Quarter 1 2023, revised down from a first estimate increase of 10.8%, reflecting a reduction in the size of the income alignment adjustment. The alignment adjustment is larger than normal for Quarter 4 (Oct to Dec) 2022 and Quarter 1 2023 (Table 3), although the size of this alignment adjustment has reduced significantly since the first estimate because of upward revisions in taxes less subsidies and compensation of employees. More detail can be found in Section 11: Measuring the data.

Elsewhere in GOS of corporations, there was an increase of 6.0% in financial corporations. This reflects a strong increase in monetary financial institutions with strong growth in Financial intermediation services indirectly measured (FISIM).

In line with theNational Accounts Revisions Policy, the dataset is open to revision back to Quarter 1 (Jan to Mar) 2023 only as part of this publication. There are revisions in this release because of the replacement of forecasts with actual survey or external source data and new seasonal adjustment factors. However, in line with the revision policy, data for Quarter 4 (Oct to Dec) 2022 VAT has not been incorporated. These data will be included in the September 2023 Quarterly National Accounts.

Table 4 shows the revisions to quarter-on-quarter growth for the components of GDP.

Household saving ratio

The household saving ratio is 8.7% in the latest quarter down from 9.3% in Quarter 4 (Oct to Dec) 2022. This downwards movement was driven by a rise in taxes on income of £5.4 billion with increased Pay As You Earn (PAYE) and self-assessment taxes paid. There was also a rise in final consumption expenditure of £5.2 billion driven by increases in housing and energy spending partially offset by decreases in spending on air transport and vehicle fuel. These downward contributions were partially offset by a rise in compensation of employees of £4.7 billion itself driven by a rise in wages and salaries, led by increased private sector average earnings.

Real households' disposable income (seasonally adjusted)

Real households' disposable income (RHDI) fell by 0.8% following positive growth of 1.3% in Quarter 4 (Oct to Dec) 2022. Within RHDI, nominal gross disposable income saw growth at 0.5% driven by increased income as described in the section on the household saving ratio. This was offset by growth in the implied deflator of 1.3% as households experienced price increases in several spending categories, including electricity, gas, and food. The increase was moderated by price falls in transport spending, particularly, air transport and motor fuels and lubricants.

Non-financial account net lending and borrowing (seasonally adjusted)

The UK’s borrowing position with the rest of the world as a percentage of gross domestic product (GDP) increased to 1.8% in Quarter 1 2023 compared with 0.6% of GDP in Quarter 4 2022.

Financial corporations decreased their net lending position to 0.3% of GDP, from 3.7% of GDP in Quarter 4 2022. This was driven by a fall in net property income of £14.3 billion, driven by a decrease in net interest and increase in dividends paid. Net interest for financial corporations is the lowest on record, with interest paid out outstripping interest received, particularly for deposit taking corporations and insurance and pension providers.

Non-financial corporations increased their net lending to 5.0% of GDP in Quarter 1 2023, from 2.6% of GDP in Quarter 4 2022. Within non-financial corporations, private non-financial corporations’ (PNFCs) saw a rise of £6.1 billion in their gross operating surplus, with subsidies received as part of the Energy Price Guarantee Scheme contributing to this strength.

Households increased their net lending position to 2.2% of GDP in Quarter 1 2023 compared with 2.1% of GDP in Quarter 4 2022. This was driven by the £4.7 billion rise in compensation of employees, discussed in the section on the households saving ratio, and a rise in net capital transfers of £3.4 billion. This was offset by a rise in taxes on income of £5.4 billion with increased PAYE and self-assessment, together with a rise in final consumption expenditure of £5.2 billion driven by increases in housing and energy spending partially offset by decreases in spending on air transport and vehicle fuels.

General government increased net borrowing to 7.6% of GDP in Quarter 1 2023 from 7.0% of GDP in Quarter 4 2022, driven by a £8.1 billion rise in subsidies paid out mostly to support businesses and households as part of the Energy Bill Relief Scheme and Energy Price Guarantee. There was also a fall in net capital transfers of £8.3 billion.

Financial account net lending and borrowing (not seasonally adjusted)

Households saw a decrease in their net lending to £18.4 billion in Quarter 1 2023 following a net lending position of £27.4 billion in Quarter 4 2022. Within their financial account, households saw negative total currency and deposits transactions for the first time since records began in 1987. Households are making record withdrawals from interest-bearing sight deposits held with UK banks and building societies, instead moving their money to higher interest, time deposit accounts, such as with National Savings and Investments. Greater withdrawals than deposits on the quarter were offset by record negative net secured lending to households of £5.2 billion, with the amount of new mortgage and re-mortgage borrowing falling; “net” meaning loans advanced to households less repayments.

Financial corporations switched to a net borrowing position of £1.5 billion in Quarter 1 2023 from a net lending position of £20.8 billion in Quarter 4 2022. This was driven by a fall in net loans of £72.5 billion and a fall in net equity and investment fund shares of £37.7 billion, offset by a rise in debt securities of £50.9 billion.

Non-financial corporations switched to a net lending position of £18.6 billion in Quarter 1 2023 from a net borrowing position of £9.1 billion in Quarter 4 2022. Within this sector, private non-financial corporations (PNFCs) switched to net lending of £18.4 billion following a net borrowing of £8.7 billion in Quarter 4 2022. This was driven by a fall in long term loans secured by UK residents of £22.8 billion.

General government decreased their net borrowing to £20.2 billion in Quarter 1 2023 from £54.0 billion in Quarter 4 2022. This rise was driven by a rise in net debt securities of £37.5 billion, offset by a fall of £20.2 billion in net other accounts receivable or payable.

Gross domestic product (GDP)

Quarterly Sector Accounts

It is useful to compare the UK’s household saving ratio with other economies such as those in the G7 group. Before the coronavirus (COVID-19) pandemic, the UK was like Canada with both having the lowest saving ratio out of the G7, with Germany having the highest. The saving ratio for the UK reacted to the coronavirus pandemic slower than other G7 members, and the UK entered the pandemic with the weakest saving ratio. All members of the G7 saw a peak in their household gross saving ratio in Quarter 2 (Apr to June) 2020 in response to the coronavirus pandemic. The United States had the highest peak at 31.0% and Italy had the lowest peak at 21.3%. Since that peak, all G7 country rates have fallen. The household gross saving ratio increased in Quarter 4 (Oct to Dec) 2022 for all countries except Italy. The UK’s saving ratio now appears to be more in line with the USA and Canada, with Italy being the only G7 country with a lower saving ratio than the UK in the latest quarter.

Contribution to growth

Contribution to growth indicates how many percentage points a sector or industry is adding or removing from a given growth rate, usually headline gross domestic product (GDP) growth.

Chained volume measure

Data in chained volume measures (CVM) within this bulletin have had the effect of price changes removed (in other words, the data are deflated), except for income data, which are only available in current prices.

Gross domestic product (GDP)

A measure of the economic activity produced by a country or region. GDP growth is the main indicator of economic performance. There are three approaches used to measure GDP:

• the output approach
• the expenditure approach
• the income approach

Index numbers

Data relative to a given base value, which typically refers to a particular year or quarter.

For further definitions, please see ourGlossary of economic terms.

Reaching the GDP balance

The different data content and quality of the three approaches - the output approach, the expenditure approach and the income approach - dictate the approach taken in balancing quarterly data. In the UK, there are more data available on output in the short term than in either of the other two approaches. To obtain the best estimate of gross domestic product (GDP) (the published figure), the estimates from all three approaches are balanced to produce an average, except in the latest two quarters where the output data take the lead because of the larger data content.

Quarterly GDP is a balanced measure of the three approaches, while the GDP monthly estimate focuses on gross value added (GVA) and output as a proxy for GDP. This results in data differences (in both levels and growths terms) between the quarterly publications (average GDP) and theGDP monthly estimate(output approach to GDP). Quarterly GDP is the lead measure of GDP because of its higher data content and inclusion of variables, which enable the conversion from a GVA concept to a GDP basis.

Information on the methods we use forBalancing the output, income and expenditure approaches to measuring GDPis available.

Alignment adjustments, found in Table M of ourGDP first quarterly estimate data tables, have a target limit of plus or minus £3,000 million on any quarter. However, in periods where the data sources are particularly difficult to balance, larger alignment adjustments are sometimes needed, as explained in ourRecent challenges of balancing the three approaches of GDP article. In our standard practice, we prefer that the alignment adjustment be out of tolerance rather than over-adjust individual GDP components to achieve a balance. This is most likely to occur in the latest quarter where the constraints are larger, where we must align to the output estimate for the change in GDP, and where the data content is at its lowest.

In this quarter, the alignment adjustment, used to align income to average GDP, is larger than normal (Table 3), reflecting the current challenges and uncertainties within the income approaches, in particular on the measurement of the Energy Price Guarantee scheme and the Energy Bill Relief Scheme within the accounts, although the size of this alignment adjustment has halved since the first estimate, reflecting upward revisions across income components. Work will continue with a focus on the income approaches to GDP, and we will continue to review this over the coming months as and when more information becomes available.

To achieve a balanced GDP dataset through alignment, balancing adjustments are applied to the components of GDP where data content is particularly weak in a given quarter because of a higher level of forecast content. The balancing adjustments applied in this estimate are shown in Table 6. The resulting series should be considered accordingly.

GDP monthly estimate

Although this release focuses on providing the best quarterly estimate of GDP, an indicative monthly path for the updated time series is provided in our Indicative monthly GDP dataset. A full breakdown of the monthly data consistent with this quarterly release will be available in the next monthly GDP release (on 13 July 2023).

The UK National Accounts are drawn together using data from many different sources. This ensures that they are comprehensive and provide different perspectives on the economy, for example, sales by retailers and purchases by households. Further information on measuring gross domestic product (GDP) can be found in ourGuide to the UK National Accounts, and more quality and methodology information (QMI) is available in ourGross domestic product (GDP) QMI.

Important quality information

There are common pitfalls in interpreting data series, and these include:

• expectations of accuracy and reliability in early estimates are often too high
• revisions are an inevitable consequence of the trade-off between timeliness and accuracy
• early estimates are based on incomplete data

Very few statistical revisions arise as a result of “errors” in the popular sense of the word. All estimates, by definition, are subject to statistical “error”.

Many different approaches can be used to summarise revisions; the "Accuracy and reliability" section in the Gross domestic product (GDP) QMI analyses the mean average revision and the mean absolute revision for GDP estimates over data publication iterations.

GDP estimates for the income measure 2023 are subject tomore uncertainty than usual in particular on the measurement of the Energy Price Guarantee Scheme and the Energy Bill Relief Scheme within the accounts.

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