Eurostat to revise EU's annual GDP figures higher

  

The European Union's statistics office will revise upwards the EU's annual gross domestic product figures by 2.4 percentage points when it switches to a new accounting standard in September, the European Commission said on Thursday (16 January).

The change will affect all past GDP figures and future data series, the EU's statistics agency Eurostat said.

The switch to the European System of Accounts 2010, replacing the old ESA 1995, is part of a worldwide move to a new accounting system called System of National Accounts 2008, already implemented in the United States last August.

"The weighted average impact on GDP of methodological changes is an increase of 2.4 percent of GDP, of which 1.9 (around 80 percent of the total impact) is due to the capitalisation of research and development," the European Commission said in a statement.

"The remaining methodological impact is due to different elements, the most important of which is capitalisation of military expenditure which represents 0.1 percentage point."

The statement said that in the United States the new standard led to an increase of 3.5 percent of GDP for years 2010 to 2012, with the capitalisation of research and development accounting for 2.5 percentage points.

The main changes introduced by the ESA 2010 are that research and development will be counted as investment rather than current expenditure. Spending on weapons systems will also be treated as investment.

The change will affect the treatment of pensions, insurance and goods sent abroad for processing, the statement said.

A table in the statement showed that Latvia, Lithuania, Hungary, Poland and Romania would have between zero and 1% more GDP growth as a result of the change.

Finland and Sweden can expect the highest revision of between 4 and 5% of GDP, Austria and Britain between 3 and 4, and Belgium, Denmark, Germany, France and the Netherlands of between 2 and 3% of GDP.

"The 2.4% is a provisional approximate estimate of the increase of the level of GDP which, more or less, will affect all years," said Louise Corselli-Nordblad of the Eurostat press office.

"In other words, all GDP figures for past recent years (and future years most probably) will be increased by approximately the same amount," she said.

"Finally, this means that changes between successive years will only be marginally affected. It should be noted that the estimated 2.4 percent does not refer to the euro area, but to the weighted average of the available member states," she said.

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Comments

Argol's picture

Are we trying to get Europeans more optimistic by a simple a change of a system of accounts???

Otto's picture

"research and development will be counted as investment"

- this is actually how things should be done. R&D is indeed an investment in the future, with the highest ROI!

evad666's picture

While I heartily agree that R&D is an investment it is too often seen as a cost on the bottom line.

Barry Davies's picture

So the eussr is now admitting it massages the figures to try to make it look good, about the only piece of honesty ever to come out of the brussells commissariat.

Otto's picture

Barry,

Did you read the article? It's about the transition to the new international rules of accounting. Many other countries (including your belowed UKssr) did the the same thing.

Barry Davies's picture

Otto your beloved eussr has been massaging the figures since its inception and even the independent accountants can't get the books to balance or find where all the money has gone, unlike the united Kingdom Which I love with all my heart, the corruption ridden democratically deficient eussr can't die quickly enough.

Joe Thorpe's picture

Is this a way of increasing budget contributions from member states?