SNAP Sandy Stewart

SNAP - Overview Introduction and background comments Strands of Project Components of Project Experimental nature of project – use of web for dissemination of ideas Project management

Karen Dunnell Measuring the UK economy 2008 Achieving coherence is a particularly difficult challenge, and the attempt to improve coherence as more information becomes available is a significant reason for longer-term revisions. Achieving greater coherence within, and between, economic statistics is a bit like trying to do a jigsaw: without the overall picture on the box to guide you, and without having all the pieces Indeed not only do you not have the picture, the picture itself changes as we compile it. Bits of the jigsaw are changed until we have a picture which makes economic sense.

Jim & Margaret Cuthbert But more generally, GERS concentrates only on government expenditures and revenues. We need to move the debate on. We need to have a much better understanding of the full picture of the key financial flows into and out of the Scottish economy. This would involve setting up an integrated set of accounts showing trade flows, (both non-oil, and oil related): and flows of private capital. This broader picture would give a much clearer indication of the scope for manoeuvre which would be open to a Scottish government as it moved towards Scottish independence, and would really transform the current rather sterile level of debate on whether Scotland could go it on its own. It is to be hoped that the Scottish government builds on the current good progress that has been made in developing GERS by moving forward towards the production of a proper set of National Accounts. Opening up the books on the true state of Scottish finances Cuthbert, M., Cuthbert, J.R.: Sunday Herald, 22nd June, 2008.

Hervey Gibson Conclusion in Note to SESCG – October 2007: Accept short term GDP for what it is Speed up production of balanced IO tables – perhaps not tied cravenly to UK regional accounts Supplement ABI with own data Need to work on Scottish price indices Need an outward looking and theoretical review to GDP/GNI – rather than the introspective and practical approach that didn’t work last time.

Project Overview Two main strands: Building on the annual Input-Output framework for Scotland to produce more up to date estimates of income, expenditure and production GDP in value terms; Use quarterly UK National Accounts and other data sources to produce a range of consistent quarterly economic indicators for Scotland.

SNAP Components GDP/GVA Input-Output Government Expenditure and Revenue Macro-economic estimates Trade Investment Prices

Component - 1 GDP GDP(O) – presented as short-term index only GDP(E) – present component estimates as produced GDP(I) – work more closely with ONS to improve quality of regional accounts. Consider balanced estimates unconstrained to any of the above

Component - 2 Input-Output Move to consistent tables over time – publication of multi-year balance early next year. Update all changes through time – e.g. reclassifications, FISIM, alignment with UK National Accounts. Quarterly updates of GDP weights. Anchoring GDP to I-O system.

Component – 3 Government Expenditure and Revenue Revenue estimates to be calculated quarterly –Financial year estimates for GERS –Calendar year estimates for Annual Accounts More comprehensive analysis of COINS database – linking expenditure to budgets, HMT funding

Component – 4 Macro-economic estimates Revisit GVA, GDP and GNI estimates More modelling – taxation analysis – use of PIMs and WGA to evaluate capital consumption for Scotland Focus on other economic indicators in system – GDHI per capita – better measure of economic welfare New indicators – Household Savings Ratio

Component – 5 Trade Incorporate GCS and IME into one system Research into flows between onshore Scotland and the Continental Shelf. Balance of Trade?

Component – 6 Investment Very limited information available for Scotland Consider Supply-side estimates of Scottish investment Surveys – of capital goods suppliers, - of capital goods purchasers Commodity Flows Modelling.

Component – 7 Prices Assess quality of UK PPIs for Scotland More distinction between export and domestic prices Double deflation using the I-O framework – use of input and output prices Calculation of implied GDP deflators for Scotland Consider consumer price indices for Scotland.

Management of Project Key staff: Sandy Stewart, Andrew Mortimer, Deborah Pegg, Kenny Grant National Accounts Branch – incorporating GERS Working Group – open to SESCG members to contribute Martin Kellaway – Special Adviser