Public sector finances: 2014 revisions

Accounting changes introduced to Public Sector Finance statistics from September 2014, are set to increase UK Public Sector Net Debt (PSND) and Public Sector Net Borrowing (PSNB) by around £130bn and £4bn respectively in 2013/14. The Public Sector Current Budget deficit and Public Sector Net Investment will also be affected.

The accounting changes being introduced by the Office for National Statistics (ONS) bring the UK’s public finances in line with the 2010 European System of Accounts (ESA2010), and implement findings from a recent review of Public Sector Finance statistics.

A complete series of data will be published on 23 September 2014 in ONS’ Public Sector Finances August 2014, including revisions of previous figures. Estimates of these revised figures have been published in recent editions of the Public Sector Finances release.

The ONS are also introducing a new way of measuring UK GDP, incorporating ESA2010 and other methodological changes. The upward revisions of nominal GDP, averaging to 4% per year would, all other things being equal, decrease debt/borrowing ratios expressed as a % of GDP. However, the revisions to PSND and PSNB mean that in some years revised ratios will actually be larger.

In March 2014 the OBR said they find it unlikely that revisions will have a significant impact on the Government’s chances of meetings its fiscal mandate to balance the cyclically-adjusted current account budget (CACB) five years ahead.